Medical trend rates are the highest they have been in years, study finds

The economic effects of the pandemic, such as rising inflation and economic volatility, have made a significant impact on the cost of medical plans around the world, Aon’s 2024 Global Medical Trends Report revealed. 

According to Aon, medical trend rates were on the rise globally throughout 2023 and are not expected to slow down in 2024. Medical trend is the predicted change in the cost of treating patients from year to year and is influenced by factors such as inflation, utilization and reimbursement rates among others. Aon’s 2024 Global Medical Trends Report found that “the global average medical trend rate for 2024 is expected to be 10.1% – up from 9.2% in 2023 and the highest it has been since 2015.” 

Regions with the highest projected increases include Latin America and the Caribbean as well as the Middle East and Africa. Europe, which is the region with the third highest medical trend, is expected to see unprecedented increases in employer-sponsored medical plans in 2024, according to Aon. It is predicted that the region will see a 10.4% trend – nearly double its 5.6% rise in 2022. 

The North American region, which includes Canada and the United States, is expected to see the smallest medical trend rate increase over the next year, likely due to comparatively lower general inflation rates, Aon revealed. The region is expected to see a 7.6% increase – the highest since the 8.5% in 2014. 

Conditions such as cancer/tumor growth, cardiovascular issues and high blood pressure/hypertension are expected to be the leading cause behind rising medical costs in 2024, Aon reported. Other conditions that progressively impact rising medical costs include diabetes, musculoskeletal/back pain, ENT/lung disorder/respiratory conditions and mental health.  

While many of these conditions are typically associated with factors such as poor nutrition, air pollution and excessive drug and alcohol use, it is actually physical inactivity and poor stress management that continue to lead the list of risk factors.

Other risk factors that are increasingly responsible for high medical trend rates include a lack of screening and obesity – particularly in the U.S. Leading employers have developed a variety of strategies to mitigate medical costs that rise year after year and often result in unexpected or unbudgeted cost increases for employers. 

According to Aon, leading employers utilize wellbeing initiatives that encourage preventative care and lower overall stress. Cost containment measures which are aimed at reducing overuse are also expected to play an important role during 2024. Such measures usually include raising deductibles and copays as well as restricting access and delivery, Aon reported. 

Read more: Health care costs are main driver behind anticipated hike in ACA premiums in 2024

Many employers also take advantage of flexible benefit plans that give both employers and employees more control over their medical spending. Aon found that flexible benefit plans have been increasingly popular at a global level with “60% of countries identifying it as a top initiative to consider in 2024.”