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The costs of employer medical benefits across the world are forecasted to rise 7.2 percent in 2021, outpacing general inflation by 5.0 percent, according to Aon’s 2021 Global Medical Trend Rates Report, recently released.

In Australia, with the advent of more expensive procedures (such as robotics) in private hospitals, medical expenses have also generally increased in Australia.

COVID-19 saw 90 per cent of private hospital beds commandeered by the government, and while the expected usage did not ultimately materialise, private hospitals are now back at capacity and regaining lost revenue due to the takeover.

A one per cent drop in Medical Trend Rate is expected as we see, at most, a single-digit decrease in private hospital revenues.

Furthermore, ancillary spend is expected to continue at maintained rates, and while public sector costs for certain surgeries have reduced due to the delay of these treatments, they’ve been replaced by COVID-19 expenditures.

“There is still a significant amount of uncertainty regarding COVID-19’s impact on deferred treatments and long-term health care,” said Tim Nimmer, Aon’s chief global actuary for Health Solutions. “While countries navigate through different outbreak phases, the expectation is that medical plan utilisation will return to normal levels during 2021 as medical services begin to reopen to the market.”

Looking globally, projected medical trend rates vary significantly by region. Costs are expected to increase the most in the Middle East/Africa regions, with average medical trend rates forecasted at 12 percent. In contrast, Europe is projected to see an average medical trend rate increase of 5.5 percent.

The survey was conducted among 107 countries that broker, administer, or otherwise advise on employer-sponsored medical plans in each of the countries covered in this report.

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Damien Kelly

Damien Kelly  

Client Director, People Risk
Contact Damien