Employer-provided medical benefit costs expected to jump 7% in 2022

by Leo Almazora13 Oct 2021

Medical benefit costs for employer-provided plans are expected to spike around the world next year, with costs in Canada estimated to see slightly smaller increases, according to a new report from global professional services firm Aon plc.

In its 2022 Global Medical Trend Rates Report, the firm said costs associated with Canadian employer-sponsored medical benefits are projected to rise 7%, surging past general inflation by 5 percentage points. Aside from higher prescription drug costs, which includes biologic immunomodulators, the trend is expected to be supported by larger costs associated with dental care and paramedical expenses.

"We continue to see a moderate decline in the expected health and dental claims activity in 2021 as a result of COVID-19,” said Joey Raheb, senior vice president and national leader for Growth & Client Engagement, Health Solutions, at Aon.

Assuming that no major subsequent lockdowns will occur, Raheb said members of employee group plans are expected to become more comfortable seeing medical practitioners in person as they get a better handle on office safety guidelines. Under that scenario, the firm is expecting utilization to be back to pre-pandemic levels by the end of this year or the beginning of 2022, setting the stage for a 7% upward trend in medical costs for Canada.

Globally, the report said employer-sponsored medical plans are anticipated to rise at a slightly faster 7.4% clip driven by a rebound in medical utilization, expanded benefits, higher unit costs for medical services, and the broad rising tide of general inflation. Regionally, the greatest cost increases are expected in the Middle East and Africa at 11.1%, almost double the rate of 5.6% expected for European employer-provided plans.

Looking at the health conditions fuelling health care claims, Aon said the top causes in Canada were autoimmune disease, cancer, cardiovascular conditions, mental health, and diabetes. It also pointed to a growing prevalence of risk factors from unhealthy personal habits including poor stress management, lack of health screening, sedentary lifestyles, bad nutrition, and ageing.

“Preventive care and outpatient are the medical services that are projected to increase in usage the most next year,” said Ed Cwikla, Aon's chief global actuary for Health Solutions. “Utilization of telehealth services is also expected to increase during 2022, continuing the strong increase observed during the pandemic.”