Risk factors, cost drivers and emerging areas of focus
Global Health Trends
The pandemic has accelerated organizations’ recognition of the importance of employee health and wellbeing on the success of their businesses. The concept of workforce resilience is not new, but it is undoubtedly enjoying a new vogue as the pandemic has forced organizations to focus on their key people-related risks, such as employee wellbeing, talent retention, implementing operational improvements and new, innovative working models and technology.
Social restrictions, remote working, and the impact of reduced physical activity has raised awareness of issues like emotional and social wellbeing, but it is important that as we embrace what emerges next, the focus on employee health, safety and wellbeing is sustained.
Countries continue to navigate different phases of COVID-19 and uncertainty remains regarding the impact on deferred medical treatments and long-term healthcare. From a pricing perspective, the most volatile line of business continues to be medical insurance. Aon’s research has confirmed that 2020 had been an unprecedented year, with a widespread reported decrease in employer medical plan utilization as a result of the pandemic and related restrictions. In turn, Aon forecasts that 2021 will observe the lowest Global Average Medical Trend Rate recorded since our research began in 2013, despite expectations that plan utilization will return to more normal levels during 2021 as medical services begin to reopen.
While 2021 will record the lowest global Medical Trend Rate since our reporting began, we continue to see medical costs rising significantly above general inflation. Indeed, we anticipate continued medical plan cost escalation due to factors such as global population ageing, overall declining health, poor lifestyle habits, and the increased prevalence of chronic conditions, as these continue to be global phenomena that are further exacerbated by the potential long-term health impacts of pandemic-related deferred treatments and routine checks.
Global Health Trends
People Risk and Claims Cost Drivers
Top conditions driving medical plan costs globally
- Cancer/Tumour Growth
- High Blood Pressure/Hypertension
- ENT/Lung Disorder Respiratory
Top global risk factors impacting adverse claims experience
- Physical Inactivity
- High cholesterol
- Poor stress management
- Bad Nutrition
- High Blood Pressure
Employers have a crucial role to play in terms of helping employees understand their health risk, encouraging and supporting healthy lifestyle behaviors, and providing access to high-quality healthcare at the right time. Otherwise, they will continue to face the prospect of added organizational costs and employee productivity losses.
Innovative organizations will continue to develop strategies to optimize the management of their medical and other health-related benefit spend, and virtual health will play a much more significant role. However, a more sustainable approach involves proactively addressing the root causes of the issue - the people risk element. Prior to the pandemic more progressive organizations had made the connection between a fit, healthy, engaged workforce and business results, and were not simply focused on managing cost. The emerging trend of the pandemic should be to accelerate this focus to a new level, particularly as organizations figure out what their reshaped business models look like moving forward. In order to promote workforce durability, organizations need to continue to create an inclusive environment where every employee can have access to support across a range of wellbeing areas, such as physical, emotional, financial, social and work-life balance. Providing access to high quality health care treatment when needed, and supporting individuals with existing health conditions is important, however, it is imperative that there is increased focus on preventative measures and promoting a healthy workforce.