Global Medical Cost Increases in 2016 expected to be 2.5 Times Higher Than General Inflation

New Aon Analysis Projects Average Cost Increases to Top 9% Globally

News provided by

Aon Hewitt

Jan 14, 2016, 08:00 ET

LINCOLNSHIRE, Ill., Jan. 14, 2016 /PRNewswire/ -- A new report from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc, estimates that the average cost increases for employer-sponsored medical plans globally will be 9.1 percent in 2016. This is 5.5 percentage points higher than the global average projected inflation rate of 3.6 percent.

Aon Hewitt's report reflects the medical trend expectations of employer-sponsored medical plans in 90 countries based on reported data from Aon professionals, clients and carriers represented in the portfolio of Aon medical plan business in each country. 

According to Aon, projected trend rates are expected to vary significantly by region. Both Latin America and the Middle East are expected to see double-digit average medical trend rates in 2016, while Europe and North America will experience trend rates just below 6 percent. Still, average trend rates for all regions are expected to exceed average regional inflation levels by at least 4 percentage points.

"We expect medical costs to continue to escalate around the world due to global population aging, overall declining health, poor lifestyle habits particularly in emerging countries, continued cost shifting from social programs and an increase in  utilization of employer-sponsored health plans," said Wil Gaitan, senior vice president and global consulting actuary at Aon Hewitt. "Regardless of the underlying medical insurance system, employers around the world are continuing to experience added organizational cost and lost workforce productivity as a result of these factors."

Average Medical Trend Rates by Region


2015

2016

Medical trend rate

Annual general inflation rate

Medical trend rate

Annual general inflation rate

Asia Pacific

10.4%

4.2%

9.4%

3.2%

Europe

5.7%

1.6%

5.9%

1.6%

Latin America and Caribbean

16.7%

6.9%

20.0%

11.0%

Middle East and Africa

13.3%

6.6%

11.6%

6.3%

North America

5.3%

1.6%

5.8%

1.5%

Global

8.7%

3.2%

9.1%

3.6%

Global Factors Impacting Medical Trend Rates
Aon Hewitt's report found that cardiovascular issues, cancer and gastrointestinal issues were the most prevalent health conditions driving health care claims around the world.  The global risk factors expected to drive future claims—and contribute to the adverse experience driving high medical cost increases—were primarily non-communicable diseases: high blood pressure, obesity and high cholesterol, followed by physical inactivity.

"Many of the factors driving global cost increases are directly linked to modern lifestyles and their incidence can be significantly reduced if individuals modify their behaviors," said Francois Choquette, global benefits practice leader at Aon Hewitt. "Employers in every country need to accelerate their efforts at helping employees both understand their own health risks and motivate them to take steps to improve their health."

About Aon
Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit: http://aon.mediaroom.com.

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SOURCE Aon Hewitt