North American employers may take some – but not much – comfort in the knowledge that medical trend rates are a lot worse in other parts of the world, except Europe.

Specifically, a projection of 2015 global medical cost increases by Aon Hewitt calls for a 6.5% jump for North America (9% for the U.S. and 4% for Canada), 6% for Europe, 14.6% for Latin America and the Caribbean, 12% for the Middle East and Africa, and 10.9% for the Asia Pacific.

All of those rates were more than double the region’s underling generalized inflation numbers. North America’s projected 2015 general inflation rate, at 1.75%, is virtually identical to 2014’s 1.76%.

The data was regionally consolidated from reports originating from 84 countries.

In a possible sign of progress, the projected 6.5% North American in crease is two full points below Aon Hewitt’s figure for last year (8.5%).

Health cost drivers

The primary health conditions driving health costs globally are generally the same within the regions. The following causes of “a contributing factor in adverse claims experience” were as follows: cardiovascular disease, 76%; cancer, 60%; diabetes, 48%; respiratory, 45%; and gastrointestinal, 44%.

The underlying risk factors driving these trends, as reported to Aon Hewitt by order of prevalence, are hypertension, 60%; poor stress management, 52%; high cholesterol, 48%; obesity, 43% and physical inactivity, 40%.

Poor stress management was more commonly reported in Europe and the Asia Pacific regions, while obesity was more widely cited in Canada and Latin America.

More fundamental factors driving what Aon Hewitt describes as “a long established pattern of high medical plan cost increases” among multinationals are:

  • Ever increasing utilization of private medical plans,
  • The aging of the world population, and
  • Higher incidence of chronic conditions for the working population.

Following U.S. lead

What’s to be done? Learn from failed efforts in the U.S., suggests Wil Gaitan, Aon Hewitt’s senior vice president of global benefits. “As learned from the U.S. experience, standard cost-management approaches will be insufficient to addressing anticipated future spiraling medical costs,” he says.

On a more positive note, Gaitan pointed to alternative approaches now prevalent at forward-looking U.S. employers, including an emphasis on health education. “It is crucial for employers,” Gaitan says, “for employers to ensure that effective health care benefits and health care education are available for all employees and their families, aimed at preventing illness and better managing chronic conditions, providing high quality health care treatment, and encouraging the global workforce to adopt healthy behaviors.

For example, smoking rates have dropped much faster in the U.S. than in most other countries.

Richard Stolz is a freelance writer based in Rockville, Md.

Register or login for access to this item and much more

All Employee Benefit News becomes archived within a week of it being published

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access