The cost of private medical treatment is expected to rise by 15 per cent in 2024, following an 8.5 per cent increase in 2023 — an ‘unprecedented’ sustained increase according to the latest data from Aon.
It’s 2024 Global Medical Trend Rates Report forecasts that these ‘trend rate’ figures represent the percent increase in the cost of private healthcare that it anticipated to be required to address projected price inflation, technology advances and the increased use of these medical plans.
The research is based on insights from 113 Aon offices that broker, administer or advise on employer-sponsored medical plans, and it is based on data on the cost of both insured and self-insured private healthcare.
Aon’s data says that the three conditions driving medical plan costs in the UK are:
- musculoskeletal and back issues
- cancer and tumour growth
- mental health
This contrasts with its global data where the top three conditions driving costs include cardiovascular conditions and high blood pressure and hypertension alongside cancer claims.
Aon says it hopes this report will serve as a valuable resource for organisations to plan global budgets and benefits strategies as employer-sponsored medical plans become a larger part of total rewards expenditure, and the pressure mounts on accurate forecasting and management of costs to to build more resilient workforces for 2024 and beyond.
Aon UK technical lead, health solutions Rachel Western adds: “The UK is in an unprecedented era. Private medical cover has always been positioned to work alongside the NHS, but this has had its own well documented difficulties, both from a primary and secondary care perspective.
“At the same time, health awareness, following the pandemic, is at an all-time high. Therefore, there is increased usage of private medical services, both on a self-pay basis and through private medical schemes.
“Utilisation of virtual GPs is also increasing, further exacerbating the pathway as more are recommending private treatment. It is compounded by significant increases in cost of treatment for certain conditions, especially around cancer, due to technological and clinical advancements and people claiming for more complex states of treatment, partly due to the after-effects of treatment delayed by the pandemic.
“All of these contribute to medical inflation, in addition to general inflationary costs driven by the current economic climate. We are at an all-time high trend rate, and this currently shows little or no signs of reducing.”
She adds: “With rising trend rates, generally comes rising premiums. The key to managing these costs is to claim less, without reducing levels of cover, or those you cover. To get medical benefits working smarter, not harder, employers can focus on health and wellbeing strategies, particularly ensuring supportive preventative tools are implemented.”
Aon vice president and medical trend leader in health solutions for multinationals, Rui Silva says: “We have been in a period of remarkable inflationary conditions and economic volatility. The series of shocks affecting economies around the world after the Covid pandemic continue to create an unstable environment for the health care market, despite continued signs of improvement. Volatile conditions will persist.
“Despite uncertainty on how long global inflationary pressures will last, it is clear from the locations surveyed that the medical trend rate will see a sharp rise in 2024 among employer-sponsored medical plans.”
