Canadian employers can expect medical costs to increase 5 per cent next year, according to a new report, though the number is a slowdown from this year.
Professional services firm Aon, which provides various kinds of insurance needs to businesses, released its 2024 Global Medical Trend Rates Report recently. In Canada, the report forecasted the average medical trend rate for 2024 to be 5 per cent, down from 7.5 percent in 2023.
The findings reflect the medical trend expectations of Aon professionals based on interactions with clients and carriers around the world.
The increases are expected in response to projected price inflation, technology advances in the medical field, plan utilization patterns and cost-shifting from social programs, the company’s announcement said.
Globally, Canada’s increase is lower, even though it is above inflation levels. The lower increase points to a gradual return to normal inflation levels. Cost-control measures have also been implemented by group benefit plan sponsors in recent years.
“The continued addition of biosimilar specialty drugs has led to recent savings in costs,” said Joey Raheb, senior vice president and Canadian national leader for growth and client engagement for health solutions at Aon. “Employers have responded to the changing economic landscape by reviewing their spending.”
The top three medical conditions driving medical plan costs in Canada are diabetes, mental health and autoimmune diseases, Aon reported.
“We have been in a period of remarkable inflationary conditions and economic volatility. The series of shocks affecting economies around the world after the COVID-19 pandemic continue to create an unstable environment for the healthcare market, despite continued signs of improvement. Volatile conditions will persist,” said Rui Silva, vice president and medical trend leader in health solutions for multinationals at Aon. “Despite uncertainty on how long global inflationary pressures will last, it is clear from the locations surveyed that the medical trend rate will see a sharp rise in 2024 among employer-sponsored medical plans.”