The cost of healthcare cover provided to employees in the UK is predicted to rise 4.3 per cent in 2020, with an increase in mental health provision one of the main factors in the hike.
The 2020 Global Medical Trends Survey, conducted by Willis Towers Watson, predicts the growth in the cost of medical insurance will be slightly higher next year compared to 2019, when costs increased 3.9 per cent.
Mental health conditions are expected to become one of the most significant cost factors in corporate cover over the next five years. More than a quarter (27 per cent) of the 296 global medical insurers surveyed predicted mental health would be among the three most common conditions affecting costs.
- Majority of employers struggle to offer standardised benefits
- Businesses prioritising wellbeing through benefits strategies
- We need to make flexible working work for everyone
Currently cancer, cardiovascular diseases and musculoskeletal conditions are the most costly conditions.
Francis Coleman, managing director, health and benefits, global services and solutions, at Willis Towers Watson, said employers should brace themselves for disruption to their benefit models. “The potential impact of mental health conditions is getting the attention of insurers and employers worldwide. As the demand for mental health services increases, employers can expect upward pressure on costs and challenges to existing health care models,” said Coleman.
Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter
Globally, 40 per cent of all respondents expected medical costs to increase at a higher rate over the next three years.
The survey highlighted that the introduction of more advanced and personalised medicine, including gene therapies, could have a material impact on costs.
Nearly three in four insurers (73 per cent) also ranked overuse of care owing to medical practitioners recommending too many services as a significant factor in price.
The results suggest the UK’s projected cost increase will be similar to that of Europe, which is expected to see a 4.3 per cent hike, against 4.9 per cent globally.
The report’s findings were similar to the Benefits Strategy & Benchmarking Survey conducted by Gallagher earlier this year, which found 71 per cent of employers were concerned about the rising cost of benefits, while 23 per cent admitted that keeping track of costs while ensuring good corporate governance was difficult.
Commenting on the Gallagher report, Charles Cotton, the CIPD’s senior adviser for performance and reward, said employers needed to better understand how their staff made benefit choices so they could target messaging more accurately.
“For this process to work, employers must invest in employee communication and education so individuals are aware of the choices they face, how to make them and the potential consequences of their decisions,” he said.