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AON: Medical plans costs could be 3 times higher than general inflation of ’19

Employer-sponsored medical plan expenses could increase almost 8 percent worldwide this year, far exceeding the average general inflation of almost 3 percent, according to the “Global Medical Trends Rate Report 2019” released by professional services company Aon.

It is estimated that the average increase in
medical and pharmaceutical expenses for health plans during 2019, offered by
employers to their employees, will be 7.8 percent. This rate is slightly lower
than 8.4 percent in 2018, mainly due to cost reduction measures, more
restrictive acquisition of medical products, new health prevention initiatives
and lower projected inflation rates worldwide.

In the case of Puerto Rico, an annual
inflation rate of 1 percent is estimated for 2019. The severe reduction in both
gross and net inflation is the result of a combination of challenges in the macroeconomic
environment and the impact of Hurricane María.

Insurers are implementing discount networks,
reviewing contracts with pharmacy administrators, among other strategies to
reduce their operational costs.

This in preparation to serve a population facing
a socio-economic crisis. In addition, a reduction in the insured population and
changes in the patterns of use that could be drivers that affect the reduction
of premiums are expected, the report stated.

“Companies
invest in their employees in the short, medium and long term through the
benefits they offer, including the medical plan,” said Maricarmen Burgos,
leader of the practice of Benefits of Aon Puerto Rico.

“When an
employee watches over their health and well-being, both the employer and the
employee earn: the employee enjoys a better quality of life and the company
minimizes the cost of said benefit,”
she said.

Medical inflation rates projections vary
significantly by region, the report shows. Countries in the Middle East/Africa
and Latin America regions will have a higher annual rate of medical cost
trends, compared to any other region, with 13.7 percent and 13.2 percent,
respectively.

In contrast, in Europe and North America
projections are observed with average single-digit increases, with Europe being
the region with the lowest rate of increase with 5.1 percent.

“Despite the reductions, the numbers for Latin
America and the Caribbean continue to be very high, and in 2019, the annual
rate of inflation in that region is estimated at 4.7 percent. The three
countries with the highest variation they are Venezuela, Argentina and Brazil,
with 100,000 percent, 25 percent and 17 percent, respectively,” said
Nicolás Jiménez, analytical leader of Aon for Latin America.

The Aon report confirmed the growing impact of
noncommunicable diseases worldwide on the costs of medical care. Cancer and
cardiovascular diseases, as well as high blood pressure, diabetes and
respiratory problems, were the main health conditions that impacted health
costs in Latin America.

The Aon report also indicates an increase in
the risks associated with poor health habits – such as hypertension, high
cholesterol, physical inactivity, poor diet and obesity.

To mitigate high costs, Aon’s report reveals
that companies continue to use traditional strategies, such as adjustments in
the design of health benefits, actions to control overuse of plans, and
negotiation of the readjustments of premiums with health service insurers.

The report also shows that employers are being
proactive in the creation and identification of programs to control chronic
conditions in the early stages of the disease, such as screening tests and
prevention programs that encourage and encourage the adoption of a healthy
eating and the practice of daily physical activity.

These strategies vary according to the
geographical region. For example, strategies for cost reduction are the most
prevalent in North America, the Middle East, and Africa. On the contrary,
welfare initiatives, such as the detection of risks and health education and
promotion, as well as preventive strategies, such as vaccination, are the most
used in Europe, Asia-Pacific and Latin America, the report stated.

“We have seen the possibility of
accessing data and information that is more sophisticated and widely comparable
among companies in some countries, different from what is done in the U.S. This
information is fundamental for employers to define and prioritize their
intervention strategies,’ said François Choquette, leader of Aon benefits
worldwide.

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This story was written by our staff based on a press release.

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