News Benefits & Pensions
Employer medical benefit costs expected to jump 7.5 per cent in 2023: Aon

The costs of employer medical benefits across Canada are forecasted to rise 7.5 percent this year, according to Aon’s 2023 Global Medical Trend Rates Report.

The report — based on insights from more than 113 Aon offices that broker, administer or advise on employer-sponsored medical plans around the world — provides insights on how medical rates will change based on interactions with clients and the insurance partners represented in their medical plan portfolio.

“Record inflation has garnered all the headlines – and is a big part of the story – but it’s important to highlight not only the top line number, but the regional differences, the conditions driving the trend rate and the ways in which companies are mitigating the increases,” said Carl Redondo, global benefits leader at Aon.

“Although there is still a fair amount of uncertainty on how long global inflationary pressures will persist, it is clear from the locations surveyed that the expectation around employer-sponsored medical plans is that the medical trend rates will see a sharp rise in 2023 – and employers need to consider several factors as they maintain the resilience of their workforce.”

As employer-sponsored medical plans become an ever-increasing part of an organization’s employee compensation, pressure is growing to accurately forecast and manage future costs, it said.

The overall market medical trend rate is an important component of overall spend, and employers need to understand the factors driving costs to better navigate volatility and make more-informed decisions.

Top medical conditions driving costs in Canada

The top medical conditions driving medical plan costs in Canada are:

1. Autoimmune disease
2. Diabetes
3. Mental health
4. Lung disorder/respiratory
5. Cardiovascular

“Over the last two years, the COVID-19 pandemic has impacted health care costs across Canada, with claims slowly returning to pre-pandemic levels during 2022,” said Joey Raheb, senior vice president and Canadian national leader for growth and client engagement for Health Solutions at Aon.

“The effects of long COVID-19 and other COVID-19 related illnesses and comorbidities (i.e., mental health) continue to evolve, while the Canadian market remains conservative in its reaction to pricing. Supply chain and rising inflation will also play a substantive role in 2023. “We expect a return to typical medical inflation driven by Canadian plan sponsors taking a more preventative and pragmatic approach to managing plan spend in 2023.”

Top medical conditions driving costs globally

The global average Medical Trend Rate for 2023 is expected to be 9.2 percent, up from 7.4 percent in 2022 and the highest since 2015. The top medical conditions driving medical plan costs globally are:

1. Cardiovascular
2. Cancer/Tumor Growth
3. High Blood Pressure/Hypertension
4. Explore findings in Aon’s 2023 Global Medical Trend Rates Report here.