Employers' medical benefit costs are set to rise in 2022

ASIA PACIFIC: The costs of medical benefit provided to employees are forecast to grow by 8.2% next year, according to the 2022 Global Medical Trends Rates report, released by Aon plc, a global professional services firm this month.

The report also predicted that growth would outpace general inflation by as much as 5.8%.

Globally, medical benefit costs are projected to rise by 7.4%, as medical service utilisation returns to pre-pandemic levels.

In 2020, the use of outpatient services recorded the most significant drop in Asia-Pacific due largely to quarantine and lockdown restrictions. However, with rising inflationary pressures in tandem with countries relaxing mobility restrictions, the report predicted that medical benefits will even exceed pre-pandemic records.

“The dual effect of higher expected utilization and inflationary pressures presents new cost challenges that need to be managed," said Tim Dwyer, Aon Asia Pacific Head of Health Solutions. "The normalization in utilisation patterns, emerging risks such as mental and musculoskeletal health and the potential for a greater Covid-19 cost burden to fall on the private sector will require employers to carefully analyze their medical plans as cost pressures increase over the next two renewal cycles.”

The report showed that over the last year, the increase in work-from-home setups was likely to have contributed to a significant spike in musculoskeletal conditions. Medication-related expenses experienced the largest inflationary increases.

The report also noted that a significant dip was seen in outpatient upper respiratory tract infection claims compared to previous years. However, expectations are high that it will recover next year when social distancing and mobility restrictions are finally lifted.

“The good news is that there are plan design and behavioral interventions available to mitigate the cost increases," Dwyer added. "The route will be uncertain and will vary by country, so it is important that companies use data and insights to make better-informed decisions to secure commercial protections at their renewals to deal with the volatility."

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