India’s employer-sponsored medical benefit costs likely to increase by 15 per cent in 2022: Survey

Insurers expect costs related to employer-sponsored medical benefits programmes in India will increase by 15 per cent in 2022, according to a report by Mercer Marsh Benefits (MMB). 

This will be the highest anticipated increase in the Asia region, three times the predicted general inflation rate for India. The report further added that it would mark the third consecutive year of a double-digit increase in the country since the onset of the Covid-19 pandemic.

The MMB Health Trends report surveyed 210 insurers globally, including 74 in Asia, and identified key trends influencing the future of employer-provided medical benefits. 

According to the results, five countries in Asia experienced higher medical trend rates than the regional average (8.8 per cent) in 2021. India had the highest medical inflation rate of 14 per cent, followed by China (12 per cent), Indonesia (10 per cent), Vietnam (10 per cent), and the Philippines (9 per cent). 

Overall, 81 per cent of insurers in Asia indicated an upward trend in medical claims activity in 2021, even though 53 per cent of insurers reported lower medical claims than pre-pandemic levels.

The report further noted that cancer (55 per cent), diseases of the circulatory system (43 per cent), and Covid-19 (36 per cent) were the top cost drivers of medical claims in Asia in 2021, while respiratory diseases (47 per cent), gastrointestinal diseases (36 per cent) and Covid-19 (34 per cent) are healthcare conditions that recorded the most frequent claims.

Joan Collar, Asia Regional Leader, Mercer Marsh Benefits, said: “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. Reducing NCDs remains a key priority for employers, for the health of their employees and their business.”

“More than ever, employer-sponsored medical benefits should be viewed as an investment in employees’ wellbeing. Employees who feel their employer cares about their health and well-being are more motivated, productive, committed, and loyal,” added Collar.

Prawal Kalita, Mercer Marsh Benefits Leader, Marsh India, added, “Rising insurance claims could potentially 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.”

Gaps remain in mental health coverage

Of all the global regions, Asia recorded the most inadequate coverage in regard to mental health. Only 34 per cent of insurers provide coverage for outpatient treatment in mental health, while 21 per cent provide coverage for preventive mental health measures.

Moreover, 32 per cent do not offer any coverage for mental health services, reflecting a huge protection gap between access to benefits against the burden of mental health risks.

However, 33 per cent of insurers are making changes to facilitate more inclusive medical plan designs by allowing coverage for the non-permanent or full-time workforce, with 54 per cent either adding or considering extending eligible expenses that are more inclusive for women, it further said.

“Employers need to develop a mental health strategy to enhance the overall wellbeing of their employees and refine their benefits strategy accordingly to align it to their diversity, equity, and inclusion goals and the different needs of their employees. With a sharp rise in the number of employees experiencing burnout and fatigue, this has become a workplace imperative. Employers need to deploy investments and resources to ensure they maintain a mentally resilient workforce,” Collar added.