Canadian Employer Medical Costs to Grow 5.0 Percent in 2024, Aon Survey Forecasts
TORONTO, Sept. 28, 2023 /PRNewswire/ -- Aon plc (NYSE: AON), a leading global professional services firm, has released its 2024 Global Medical Trend Rates Report. The findings reflect the medical trend expectations of Aon professionals based on their interactions with clients and carriers represented in the portfolio of the firm's Health Solutions business throughout the world. In Canada, the report forecasted the average medical trend rate for 2024 to be 5.0 percent, down from 7.5 percent in 2023.
The trend rate figures represent the percentage increases in medical plan unit costs - insured and self-insured - that are anticipated to be required to address projected price inflation, technology advances in the medical field, plan utilization patterns and cost shifting from social programs.
Lower net percentage in Canada
While Canadian medical trend is forecasted to be 2.6 percent higher than general inflation next year, it will be low compared with the rest of the world, at 10.1 percent. A gradual return to normal inflation levels, combined with the cost-control measures implemented by group benefit plan sponsors in recent years, provides a better forecast for healthcare trend in Canada for 2024 compared to 2023.
"The continued addition of biosimilar specialty drugs has led to recent savings in costs," said Joey Raheb, senior vice president and Canadian national leader for growth and client engagement for Health Solutions at Aon. "Employers have responded to the changing economic landscape by reviewing their spending."
According to Aon, it will be important to monitor the effects of the backlog in preventive and diagnostic treatments observed in recent years, which could result in a significant increase in health risks and the aggravation of minor issues not treated in a timely manner. These delays create a lag in the claims associated with treating those conditions for group benefit plans, an effect that will be somewhat minimized in 2024.
"While the focus is on diversity, equity and inclusion, mental health and wellbeing initiatives remain paramount for organizations, though some cost pressure is expected to remain, which may mitigate any enhancements or introductions of new costs to programs," Raheb added. "Overall, we expect the medical trend to be lower than the rates seen in previous years, and we are more optimistic about a sustainable healthcare outlook."
The top three medical conditions driving medical plan costs in Canada are:
Diabetes
Mental Health
Autoimmune Diseases
Globally, Aon has forecasted the average medical trend rate for 2024 to be 10.1 percent, up from 9.2 percent in 2023 and the highest since 2015. The top medical conditions driving medical plan costs globally are:
Cardiovascular
Cancer/Tumor Growth
High Blood Pressure/Hypertension
As employer-sponsored medical plans become a larger part of total rewards spend and pressure mounts to accurately forecast and manage costs, this report will serve as a valuable resource for organizations to plan global budgets and benefits strategies through better decisions that help build more resilient workforces for 2024 and beyond.
"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-19 pandemic continue to create an unstable environment for the healthcare market, despite continued signs of improvement. Volatile conditions will persist," said Rui Silva, vice president and medical trend leader in Health Solutions for Multinationals at Aon. "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."
The report is based on insights from 113 Aon offices that broker, administer or advise on employer-sponsored medical plans in each of the countries covered in the report. Read Aon's 2024 Global Medical Trend Rate Report here.
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SOURCE Aon plc
