December 2013 - Retirement - Health | Aon Report December 2013 Global Beneﬁts . 3 5 8 20 ... Social programs and increasing utilization of employer ... Asia Pacific Europe Latin

Aon Hewitt

2013/2014 Global Medical

Trend RateSurvey Report

December 2013

Global Benefits

3

5

8

20

2013/2014 Global Medical Trend Rate

Survey Report

Contents

Introduction

Key Highlights

Call to Action

Survey Results

Average Medical Trend Rate Table

Key Reported Causes of Adverse Medical Claim Experience

Risk Factors Driving Supplementary Medical Plan Costs

Global Wellness and Health Promotion Initiatives

Appendix

Trend Rate Overview

2 Aon Hewitt

2013/2014 Global Medical Trend Rate Survey Report 3

Introduction

Aon Hewitt is pleased to present the results of its survey of 2013 and

2014 medical trend rates around the world. The survey was conducted

among Aon Hewitt offices that broker, administer or otherwise advise on

medical plans that are established and managed by employers in each

of the 69 countries covered in this report. The survey responses reflect

the medical trend expectations from Aon professionals, clients and

carriers represented in the portfolio of Aon medical plan business in

each country. The trend rates presented herein do not include any

allowances for potential employer countermeasures such as cost-

containment plan amendments or the impact of any attendant carrier

negotiations.

Aon Hewitt has conducted this survey in order to assist multinational

companies in:

Budgeting premium costs for medical plan renewals for the two projection years

Understanding the factors that are driving medical cost increases

Devising wellness and cost-containment initiatives to respond to the challenges

The trend rate figures shown is this report represent the percentage

increase in medical plan (insured and self-insured) unit costs that are

anticipated to be technically required in order to address projected price

inflation, technology advances in the medical field, plan utilization and

cost shifting from social programs. This survey covers three separate

themes:

Estimated medical trend rates for 2013 and 2014

Risk factors that are expected to drive medical cost inflation in the future

Wellness and health promotion initiatives being undertaken by employers in order to deal with spiraling medical cost trends

As a reference, we have also included the general inflation rates for

2013 and 2014 published by the International Monetary Fund which

have been adopted as a proxy for domestic retail inflation levels in each

country for the two projection years included in the survey.

The trend rate figures and risk factors in this report relate to employer-

sponsored plans and their participants. The information presented is not

necessarily representative of each country’s health care costs as a

whole, nor of the health care situation of each country’s population

overall.

4 Aon Hewitt

Aon Hewitt intends to issue annual survey updates in the future. We

expect that as the global demand for medical plan benefits extends to

more countries, the number of participating countries published in our

reports will rise.

We hope you will find this report useful. We welcome any feedback you

may wish to provide.


Key Highlights

The prevalence of employer sponsored medical plans is increasing in all

countries covered by the survey. Furthermore, the scope of the

supplementary plan coverage is expanding vertically (e.g., larger

maximum lifetime benefits, larger allowances for maternity benefits) as

well as horizontally (e.g., fewer exclusions, more procedures covered by

the plan).

The medical trend rates continue to exceed local general inflation levels.

In 2013 the global average medical trend rate of 10.14% was 5.8 percentage points higher than the average inflation rate of 4.34%

1

For 2014, an even wider difference of 6.11 percentage points between the average medical trend rate of 10.34% and the average general inflation rate of 4.23% is expected

2

Aon Hewitt expects further medical cost escalation due to global population ageing, overall declining health, poor lifestyle habits pervading across emerging countries, continuing cost-shifting from Social programs and increasing utilization of employer sponsored plans

Double digit margins between medical trend rates and domestic inflation

levels were found in:

Asia Pacific Europe Latin America Middle East/Africa

Singapore Ireland Argentina Oman

Vietnam Norway Venezuela UAE

Ukraine Honduras

1 IMF World Economic Outlook Database April 2013.

2 Ibid.

6 Aon Hewitt

The three main reported conditions that are giving rise to adverse claim

experience around the world are:

% Responding

Cardiovascular 77

Cancer 55

Respiratory 44

Differentials by geographic region in the main medical conditions that

were reported to generate adverse claim experience are:

Non-Communicable Diseases (NCDs) represent the main conditions

behind the adverse experience which is driving high medical inflation.

NCDs are directly linked to modern lifestyles, and incidence can be

significantly improved through modification of individual behaviors. This

represents both a challenge and an opportunity for employers to

influence these behaviors.

The key reported global risk factors that are expected to drive future

claims are:

% Responding

High Blood Pressure 72

High Cholesterol 49

Stress 49

Africa Asia Pacific Canada Europe Latin America Middle East

Cardiovascular Respiratory Cardiovascular Cancer Cancer Cardiovascular

Infectious Disease

Gastro-Intestinal Mental Health Mental Health Respiratory Respiratory

Obstetrics Cancer Diabetes Diabetes Diabetes Diabetes


Call to Action

Differentials by geographic region in the risk factors that are expected to

generate future claims are:

The most common wellness and health promotion initiatives being

undertaken by progressive employers globally are:

% Responding

Detection 85

Education 79

Advanced Assessment and Wellness Interventions

71

The findings addressed in this report suggest that employers will need to

accelerate their efforts at helping employees to understand their own

health risk and to begin to take steps to improve health. Rising costs and

increased prevalence of chronic conditions are a global phenomenon;

regardless of the underlying medical insurance system, employers will

experience added organizational cost and lost workforce productivity if

these trends continue.

Africa Asia Pacific Canada Europe Latin America Middle East

High Blood Pressure

Stress Stress Stress High Blood Pressure

High Blood Glucose

Infectious Diseases

High Blood Pressure

Sedentary Lifestyle High Blood Pressure

Obesity High Blood Pressure

High Blood Glucose

High Cholesterol

Costly Novel Therapies Emerging (treat previously untreated conditions)

Smoking High Blood Glucose

Obesity

8 Aon Hewitt

Survey Results

Average Medical

Trend Rate Tables

2013 2014

Annual General Inflation Rate (%)

3

Annual Medical Trend Rates


4


Region Gross (%) Net (%) Gross (%) Net (%)

Global 4.34 10.14 5.80 4.23 10.34 6.11

North America 1.66 7.10 5.44 1.76 8.50 6.74

Europe 2.05 6.23 4.18 2.04 5.94 3.90

Asia 3.87 10.20 6.33 4.21 10.12 5.91

Latin America & Caribbean 5.95 12.85 6.91 5.85 14.35 8.50

Middle East & Africa 6.85 13.14 6.29 5.93 12.28 6.35

2013 2014


5



6


Region and Country Gross (%) Net (%) Gross (%) Net (%)

North America (Avg) 1.66 7.10 5.44 1.76 8.50 6.74

Canada 1.49 5.00 3.51 1.81 8.00 6.19

United States 1.83 9.20 7.37 1.71 9.00 7.29

Europe (Avg) 2.05 6.23 4.18 2.04 5.94 3.90

Austria 2.20 2.50 0.30 1.90 2.50 0.60

Belgium 1.73 4.00 2.27 1.36 4.00 2.64

Bulgaria 2.05 3.00 0.95 1.91 3.00 1.09

Denmark 2.00 2.13 0.13 2.00 2.20 0.20

Finland 2.90 10.00 7.10 2.51 10.00 7.49

France 1.57 5.00 3.43 1.46 8.00 6.54

Germany 1.61 4.00 2.39 1.70 4.00 2.30

Greece -0.80 2.00 2.80 -0.44 0.00 0.44

Hungary 3.20 3.70 0.50 3.50 3.80 0.30

Ireland 1.32 20.00 18.68 1.27 10.00 8.73

3 IMF World Economic Outlook Database April 2013

4 Ibid.

5 Ibid.

6 Ibid.


2013 2014


5



6



Italy 1.99 3.00 1.01 1.43 3.00 1.57

Norway 1.50 12.00 10.50 1.50 15.00 13.50

Poland 1.85 5.00 3.15 2.00 5.00 3.00

Portugal 0.70 4.00 3.30 1.03 4.50 3.47

Romania 4.62 7.00 2.38 2.87 5.00 2.13

Russia 6.86 9.40 2.54 6.18 9.00 2.82

Spain 1.94 5.00 3.06 1.50 5.00 3.50

Switzerland -0.20 1.20 1.40 0.20 3.00 2.80

The Netherlands 2.82 3.50 0.68 1.74 3.40 1.66

Ukraine 0.48 15.00 14.52 4.68 15.00 10.32

United Kingdom 2.65 9.33 6.68 2.50 9.25 6.75

Asia (Avg) 3.87 10.20 6.33 4.21 10.12 5.91

Australia 2.46 8.00 5.54 2.54 7.80 5.27

China 3.01 7.30 4.29 3.00 7.00 4.00

Hong Kong 3.50 9.00 5.50 3.50 9.00 5.50

India 10.82 12.00 1.18 10.71 12.00 1.29

Indonesia 5.57 15.00 9.43 5.57 15.00 9.43

Japan 0.06 3.90 3.84 2.97 3.90 0.93

Kazakhstan 7.22 5.00 -2.22 6.40 5.00 -1.40

Malaysia 2.20 11.00 8.80 2.40 11.00 8.60

New Zealand 1.39 7.00 5.61 2.23 7.00 4.77

Philippines 3.06 10.00 6.94 3.22 9.00 5.78

Singapore 4.01 20.00 15.99 3.44 20.00 16.56

South Korea 2.36 5.50 3.14 2.90 6.00 3.10

Taiwan 2.00 10.00 8.00 2.00 10.00 8.00

Thailand 3.00 9.30 6.30 3.43 9.10 5.67

Vietnam 7.32 20.00 12.68 8.80 20.00 11.20

Latin America & Caribbean (Avg) 5.95 12.85 6.91 5.85 14.35 8.50

Argentina 9.84 26.00 16.16 10.05 30.00 19.95

Bahamas 2.00 10.00 8.00 2.00 10.00 8.00

Bolivia 4.63 10.00 5.38 4.28 10.00 5.72

Brazil 6.13 14.41 8.28 4.73 16.12 11.39

10 Aon Hewitt

2013 2014


5



6



Chile 2.14 3.00 0.86 3.00 5.00 2.00

Colombia 2.22 10.25 8.03 3.01 12.00 9.00

Costa Rica 4.67 12.00 7.33 5.00 13.00 8.00

Dominican Republic 4.45 8.00 3.55 4.75 10.00 5.25

Ecuador 4.66 12.00 7.34 4.11 15.00 10.89

El Salvador 1.90 8.00 6.10 2.40 9.00 6.60

Guatemala 4.30 12.00 7.70 4.35 12.00 7.65

Honduras 5.70 20.00 14.31 5.80 25.00 19.20

Jamaica 8.49 11.00 2.51 6.70 20.00 13.30

Mexico 3.69 9.00 5.31 3.25 9.00 5.76

Nicaragua 7.02 12.00 4.98 8.31 13.00 4.69

Panama 5.20 10.00 4.80 4.80 12.00 7.20

Puerto Rico 3.00 6.50 3.50 3.00 6.50 3.50

Trinidad and Tobago 5.59 10.00 4.42 4.00 10.00 6.00

Venezuela 27.34 40.00 12.66 27.65 35.00 7.35

Middle East / Africa (Avg) 6.85 13.14 6.29 5.93 12.28 6.35

Angola 9.40 12.60 3.21 8.43 11.30 2.87

Egypt 8.24 14.00 5.76 13.66 19.50 5.85

Kenya 5.17 11.10 5.94 5.00 10.00 5.00

Malawi 20.20 27.30 7.10 8.15 12.10 3.95

Nigeria 10.67 11.20 0.53 8.19 11.20 3.01

Qatar 3.02 13.00 9.98 3.97 14.00 10.03

Saudi Arabia 3.74 12.00 8.26 3.57 11.50 7.93

South Africa 5.77 9.00 3.23 5.50 10.00 4.50

Sultanate of Oman 3.33 15.00 11.67 3.26 15.00 11.74

Turkey 6.64 12.00 5.36 5.30 12.00 6.70

United Arab Emirates 1.59 12.00 10.42 1.91 12.50 10.60

Zimbabwe 4.45 8.50 4.05 4.17 8.20 4.03

Note: Net indicates net of domestic general inflation rates. The trend rate for the USA has been obtained from Aon Hewitt’s annual Health Care Trend Surveys (January-June) for 2012 and 2013 as applicable for PPO plans (prior to any plan changes for cost-containment).


Key Reported

Causes of Adverse

Medical Claim

Experience

Top Global Main Causes

The percentage figures below represent the percentages of responses

from Aon offices that reported the indicated cause as a contributing

factor in adverse claims experience in their respective countries.

Aside from the cardiovascular cause (which was reported in 77% of the

countries surveyed), the leading causes per region as reported by Aon

offices were:

Asia Pacific

(% of Responses) Europe

(% of Responses) Latin America

(% of Responses) Middle East/Africa (% of Responses)

1 Respiratory 47 Cancer 60 Cancer 68 Respiratory 67

2 Gastrointestinal 47 Mental Health 45 Respiratory 58 Diabetes 56

3 Cancer 47 Diabetes 40 Diabetes 53 Cancer 33

4 Infectious Diseases 33 Gastrointestinal 35 Prescription Drugs 42 Gynecological 33

5 Gynecological 27 Gynecological 25 Gastrointestinal 42 Accident 33

77

55

44 41 34

Cardiovascular Cancer Respiratory Diabetes Gastrointestinal

% Responding

12 Aon Hewitt

Risk Factors Driving

Supplementary

Medical Plan Costs

Top Global Risk Factors

The figures below represent the percentages of responses from Aon

offices that reported the indicated risk as becoming a leading factor in

future adverse claims experience in their respective countries.

Risk Factors % Responding Risk Factors % Responding

1 High Blood Pressure 72 9 Occupational Risks 15

2 High Cholesterol 49 10 Genetics 11

3 Stress 49 11 Air Pollution 10

4 Obesity 43 12 Disease Transmitting Organism 7

5 High Blood Glucose 34 13 Cancer 5

6 Physical Inactivity 34 14 Kidney Dialysis 5

7 Smoking 28 15 Unsafe Water, Sanitation, Hygiene 3

8 Bad Nutrition 15

72

49 49 43

34

High BloodPressure

HighCholesterol

Stress Obesity High BloodGlucose

% Responding


The figures below represent the percentage of Aon offices reporting the

indicated risk factors in their respective region.

Asia Pacific

(% Responding) Europe

(% Responding) Latin America

(% Responding) Middle East/Africa (% Responding)

1 Stress 62 Stress 74 High Blood Pressure 89 High Blood Pressure 100

2 High Blood Pressure 54 High Blood Pressure 58 High Cholesterol 63 High Blood Glucose 33

3 High Cholesterol 54 Smoking 47 Obesity 47 Physical Inactivity 44

4 Obesity 46 High Cholesterol 42 High Blood Glucose 47 High Cholesterol 33

5 High Blood Glucose 31 Obesity 42 Stress 37 Cancer 33

14 Aon Hewitt

Global Wellness and

Health Promotion

Initiatives

Wellness Programs Reported

as Commonly Provided (% Responding)

Detection (% Responding)

Coaching (% Responding)

The figures below represent the percentages of responses from Aon

offices that reported the indicated wellness program as commonly

provided among the indicated employer groups in their respective

countries.

All

Employers Progressive Employers

Physical Check-ups 37 68

Vision Screening 31 60

Hearing Screening 24 49

Mammograms 19 47

All


Incentive Programs 3 51

Health Specialists 3 35

Health Coaching Management Systems 1 26

54

31 29 25

9

85 79

71 71 63

Detection EducationPrograms

AdvancedAssessment

programs

WellnessInterventions

CoachingPrograms

Commonly Provided across all EmployersProvided by Progressive Employers


Wellness Interventions (% Responding)

Advanced Assessment (% Responding)

Education (% Responding)

All


Quitting Smoking/Tobacco Use 19 49

Physical Activity 13 51

Employee Assistance Program 13 44

Healthy Eating 12 46

Health Weight 10 44

Back Care 10 34

Reducing Risk for Health Disease 9 38

All


Heart Health 12 46

Advanced Check-ups 9 37

Substance Use 9 26

Nutrition 7 44

Level of Fitness 0 37

All


Communication Materials on Wellness 26 66

Wellness Kits 21 63

Informational Web Services 19 56

Fitness Education 9 51

16 Aon Hewitt

0 10 20 30 40 50 60 70 80 90 100

Back Care

Reducing Risk for Heart Disease

Employee Assistance Program

Healthy Weight

Healthy Eating

Quitting Smoking/Tobacco Use

Physical Activity

Health Coaching Management Systems

Health Specialists

Incentive Programs

Fitness Education

Informational Web Services

Wellness Kits

Communication Materials on Wellness

Level of Fitness

Nutrition

Substance Use

Advanced Check-ups

Heart Health

Mammograms

Hearing Screening

Vision Screening

Physical Check-ups

Wel

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Det

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Asia Pacific

All Employers Progressive Employers


0 10 20 30 40 50 60 70 80 90 100

Back Care



Healthy Weight

Healthy Eating


Physical Activity


Health Specialists

Incentive Programs

Fitness Education


Wellness Kits


Level of Fitness

Nutrition

Substance Use

Advanced Check-ups

Heart Health

Mammograms

Hearing Screening

Vision Screening

Physical Check-ups

Wel

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Det

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Europe


18 Aon Hewitt

0 10 20 30 40 50 60 70 80 90 100

Back Care



Healthy Weight

Healthy Eating


Physical Activity


Health Specialists

Incentive Programs

Fitness Education


Wellness Kits


Level of Fitness

Nutrition

Substance Use

Advanced Check-ups

Heart Health

Mammograms

Hearing Screening

Vision Screening

Physical Check-ups

Wel

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s In

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on

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uca

tio

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d A

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nt

Det

ecti

on

Latin America



0 10 20 30 40 50 60 70 80 90 100

Back Care



Healthy Weight

Healthy Eating


Physical Activity


Health Specialists

Incentive Programs

Fitness Education


Wellness Kits


Level of Fitness

Nutrition

Substance Use

Advanced Check-ups

Heart Health

Mammograms

Hearing Screening

Vision Screening

Physical Check-ups

Wel

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Middle East/Africa


20 Aon Hewitt

Appendix

Trend Rate

Overview

The trend rates shown in this report represent national averages

and are the predicted increase in claims cost. Trend increases for a

specific company may vary significantly from these trend rates due

to regional cost variations, company plan design, company

demographics and other factors. In addition, insured rate increases

may be higher or lower than these trend rates based on an

insurance company’s profitability, the plan’s claims loss ratio, the

plan design, insured demographics and other factors. It is important

to note that these trend rates might not be appropriate for other

purposes.

Medical trend rate is defined as percentage of change in the cost of

health care prior to any cost-containment measure undertaken by

plan sponsors.

The components of health care trend that we have considered

include:

Price inflation – This is the projected annual change in the domestic retail consumer price index health care element of each country. In absence of information on projected inflation for the medical plan component in any given country, we have used the change in the overall consumer price index

Leveraging impact on fixed amount elements of plan design – This is the additional cost added to a health plan due to the leveraging effect of increasing expected claims on unchanging deductibles, copays, or out-of-pocket maximums

Utilization – This component reflects an increase in the demand for medical care services in response to factors such as increased access to medical services, plan design, participant age, and new medical technology and services

Technology advances – This reflects the change in cost due to new procedures, information, experience, and equipment replacing older techniques

Cost shifting – This reflects a provider of medical services such as government social health care programs transferring their cost to private sector supplementary plans

Copyright 2013 Aon plc

About Aon Hewitt Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, a!ordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit www.aonhewitt.com.

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December 2013 - Retirement - Health | Aon Report December 2013 Global Beneﬁts . 3 5 8 20 ... Social programs and increasing utilization of employer ... Asia Pacific Europe Latin