Changing Trends In Employer Sponsored Group Medical Cost

It’s a frequently used expression among corporates that ‘your people are your greatest asset’. The modern world of work is in a state of change and attracting good employees in this new environment is complex, yet becoming progressively more important. Employees increasingly view benefits not as mere perks but as tools to fulfill fundamental life needs. Moreover, these needs are reflected in behavioural tendencies and demographic factors that employers can measure and use to attract and retain the best employees.

Affordable, accessible and quality continue to remain key imperatives for organization and individuals alike when it comes to healthcare. The Mercer Marsh Benefits (MMB) annual medical trend survey, ‘Medical Trends Around the World’, released recently indicated- the average global medical trend rate of 9.5 percent remains close to three times that of economic inflation. Projections for 2018 expect a 9.1 percent global average, with most countries reporting they expect the trend to remain consistent from last year.

Health Risk Management solutions, a growing number of companies regard them as an effective way to address the rising trend of chronic diseases from diabetes to heart disease and the related costs that are draining their bottom line. Majority of these diseases are lifestyle-related and having a wellness program onboard that helps employees adopt healthier habits can significantly reduce illness, accidents, absences and medical claims. Increased productivity is an additional and hard-to-ignore benefit.

Changing disease pattern

Non-communicable diseases like cancer and ailments related to the circulatory system continue to account for leading claims across all regions of the world, in terms of cost, while Respiratory conditions and diseases of the circulatory system, respectively, and still have the highest frequency of claims, followed by cancer.

Globally the top three risk factors remain metabolic and cardiovascular risk, dietary risk and emotional/mental risk, reported the MMB report.

The fast-evolving urbanization in India has brought along with it lifestyle diseases like cardiovascular, diabetes, hypertension, asthma and respiratory as well as cancers.

Over the last 26 years, the country’s disease patterns have shifted: India’s population is living longer, with non-communicable diseases (NCDs) like heart disease, stroke, diabetes and injuries are increasingly contributing to overall disease burden.

Among the leading non-communicable diseases, the largest disease burden increase from 1990 to 2016 was observed for diabetes, at 80 percent, followed by ischemic heart disease, at 34 percent. 

The numbers speak for themselves, today, India has the highest number of diabetics at 50.8 million, which is expected to increase to 73.5 million by 2025. Twenty-five million suffer from cardiovascular diseases in India, which amount to 60 percent of the global figure. 

India has over two million registered cancer patients. This lifestyle disease is mainly caused by smoking, unhealthy diet, lack of physical activity, stress leading to lowered immunity and therefore the body’s inability to fight viruses.

Mental health is a major concern worldwide and India is not far behind this. Stresses of the modern workplace can both cause or exacerbate mental health illnesses among employees. 

A 2015 ASSOCHAM study indicated that 42.5 percent of employees in the private sector suffer from depression or general anxiety disorder. The suicide rate in India in 2015 was at 15.7/100,000. This is higher than the regional average of 12.9 and the global average of 10.6. (WHO 2016).

Trend observed globally and in India on changing employer sponsored group medical cost

Health insurance expenses are the fastest growing cost component for employers and the startling figures have become all too familiar to an expanding legion of businesses, both large and small.

The MMB findings indicate that employers worldwide are engaging a number of ways to improve employee health and/or contain healthcare costs. This includes Health risk assessment, Onsite clinics, Access to resources/specialists, coverage for preventive care; all these measures are yielding strong results in Asia. 

Corporates now realize the importance of management-led health and wellness programs that result in a happier and healthier workplace – with less distress, higher engagement and increased wellbeing. Successful health and productivity strategies can result in fewer missed work days, higher engagement on the job, and lower attrition among many other benefits.

Employers have started incentivizing employees who adopt healthier habits.

For India, a country with a diversified workforce, and varied family size & need, corporates today focus on maximizing benefits for long-term sustainability of the investments they make in Benefit plans. 

Adopting integrated health and well-being strategies underpinned by innovative insurance solutions to address to the varied workforce will be critical in managing the rising costs of employee health benefit programs going forward.

Mental health awareness is rising and organizations today, are sensitive to the needs of their diverse population, in offering insurance support in the form of customized covers to address to needs of employees. Special covers to psychiatric intervention, counselling and rehab support are offered.

Emerging Trends & covers available

Globally, preventive and primary care are the most common areas where employers might seek to expand coverage. 

Indian corporates sector has observed a varied range of trends where benefit providers have become more progressive in their outlook. Some covers are being now demanded, that was not being offered as a part of the insured medical plans until recently. These include coverage for OPD, Dental & Vision, Infertility, disability due to sickness, psychological interventions, Diet & Nutrition counselling, and adult vaccinations.

It is increasingly becoming important for organizations to adapt to the demands of the rapidly dynamic workforce and offering innovative benefit offerings to their employees. We see an increase in adoption of voluntary & flexible benefits as a way to address changing employee needs and offer wellness programs.