Health perk’s costs to rise 15% for companies, finds report


MUMBAI: The cost of health benefits provided by employers is expected to increase by 15% in India, the highest in Asia. The rate of medical inflation has been the highest in India at 14%, which will drive up the cost of health benefits, according to a report by Mercer Marsh.
Since employer health benefits are provided mainly through group insurance covers, the cost of such policies is likely to rise. “Rising insurance claims could lead to higher premiums, tighter underwriting practices, or policy exclusions. To address the root cause of rising medical claims and the impact of non-communicable diseases on employees in India, benefit plans need to integrate outpatient department treatments, critical illness coverage and wellness programmes in order to support colleagues in a more holistic manner,” said Prawal Kalita, Mercer Marsh Benefits (MMB) leader, Marsh India.
The results show that five countries in Asia experienced higher medical trend rates than the regional average (8.8%) in 2021.
India had the highest medical inflation rate of 14%, followed by China (12%), Indonesia (10%), Vietnam (10%) and the Philippines (9%). Overall, 81% of insurers in Asia indicated an upward trend in medical claims activity in 2021, even though 53% of insurers reported lower medical claims than pre-pandemic levels.
Medical inflation rises faster than general inflation. Unlike general inflation, which is a function of demand and supply, medical inflation also factors in the increased cost of new drugs and procedures. Insurers in India say that the cost of hospital treatment during the pandemic has gone up because of fresh protocols that have to be followed and new expensive drugs used in treatment.
According to MMB, costs have soared despite lower levels of medical treatment than before the pandemic, a trend exacerbated by deferred healthcare treatments that, for many, have resulted in more adverse outcomes, leading to higher costs. The MMB Health Trends report surveys 210 insurers globally, including 74 in Asia, and identifies key trends influencing the future of employer-provided medical benefits.





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