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AonHewitt 2016 Global Medical Trend Expectations

By January 25, 2016Commentary

AonHewitt, the large benefit consultant, issues its 2016 Global Medical Trend Rates report.   (Aon Report)   The report is based on surveys conducted in 90 countries regarding employer-sponsored plans and is largely designed to help multinational employers identify unit costs for the coming year.   While many countries have national medical and/or insurance systems, these systems are weakening and employers find that the offering of supplemental insurance is becoming more important everywhere.  The report also compared medical spending increases to expected general inflation rates in the various countries.  For 2015 the global average medical trend was 8.75%, 5.5% higher than global average inflation.  For 2016, the gap is expected to persist, with medical trend rising to 9.1% and inflation to 3.6%.  In a number of countries, the gap between medical trend and general inflation is double digits.

The diseases causing the increasing spending vary somewhat from region to region but generally include cardiovascular disease, cancer, gastrointestinal illness and mental health problems.  Lifestyle issues like obesity, high blood pressure, high lipid levels and diabetes are increasing in most parts of the world.  The leading spend category is hospital care.  As they have in the US, around the world employers are responding in part by emphasizing detection, prevention and wellness.  Oh, and for the US, AonHewitt says in 2015 medical trend was 5.3%, compared to inflation of only 1.6% and that for 2016, trend will grow to 5.7% while inflation shrinks slightly to 1.5%.

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