Cost of staff medical care around the world continues to outpace inflation

Research by Mercer Marsh Benefits advises employers to come up with a long-term healthcare strategy. 
The cost of providing medical care to staff continues to outpace inflation in most major economies across the world due to rising number of claims based on employee lifestyle choices, research has revealed.
The study entitled ‘Medical Trends Around the World’ indicated that the average global increase in healthcare costs was almost triple the rate of inflation. Last year, costs jumped by an average of 9.9%, while inflation rose by 3.9%. Figures for 2016 are forecast to come show a 9.8% upsurge in such costs against an inflation rate of 3.5%.
The research, which was undertaken by Mercer Marsh Benefits and is based on a survey of 171 insurers, said that costs across 40 countries not including the US, were being pushed upwards by an escalation in the level of non-communicable diseases caused by factors such as smoking, lack of exercise and poor diet.
But Graham Pearce, a partner at business consultants Mercer, warned that the current medical cost inflation rate was simply not sustainable. “It is, therefore, of the utmost importance that employers become much more serious about ‘bending the trend’ with a long-term healthcare strategy,” he said. 
But this approach would require some initial investment, strong executive support and rigorous analysis of what is, and is not, working for specific workforce populations, Pearce continued.
Another important consideration was helping employees to “live a healthier life, improve their productivity, reduce absences and increase engagement. Wellness programmes, education on the impact of lifestyle choices and the redesign of medical insurance plans have all had an important role to play in better controlling long-term medical plan cost trends”, he said.
The region with the lowest expected medical cost increases during 2016 at 7.8% against an inflation rate of 2.1% is Europe. Russia (17.8%), Lithuania (17.3%) and Ukraine (15%) are forecast to see the biggest leaps in expense terms, with France (1.8%), the Netherlands (2.5%) and Italy (2.9) likely to experience the lowest.
The top claims in the region based on total cost are predicted to be cancer (53%), osteo-muscular diseases (43%) and circulatory problems (41%), although gastro-intestinal issues are also on the rise as are stress-related conditions.
In Asia-Pacific, meanwhile, costs were expected to increase by an average of 11.5% compared with an inflation rate of 2.1%. Vietnam (19.3%), Malaysia (17.3%) and Indonesia (11.8%) are believed to have seen the biggest hikes, with circulatory issues (59%), cancer (52%) and respiratory conditions topping the list of most common claims.
Finally, Latin America experienced a growth in medical rates of 12.8% compared with average inflation levels of 8%. Cost increases are forecast to be highest in Argentina (33.3%), followed by Brazil (18.6%) and Mexico (11%), with the highest number of claims relating to cancer (82%), circulatory problems (68%) and respiratory illness (27%).
As for the conditions that are expected to generate the highest medical costs in future, they are based on metabolic factors such as high blood pressure and cholesterol, and diet, that is obesity and physical inactivity.