Costs for employer sponsored-medical plans in 2018 arelikely to rise 8.4% – nearly triple the projected rate ofinflation, as global risk factors such as high bloodpressure, physical inactivity and obesity increase,according to Aon's report, “2018 Global Medical TrendRates.”

For 2018, the gap between the average medical trend rate and theaverage general inflation rate is expected to modestlydecrease to 5.3 percentage points from the corresponding 5.4 figurein 2017. The average nominal medical trend rate is expected toincrease 0.2 percentage points: For 2018, the global averagemedical trend rate was 8.4% and the average general inflation ratewas 3.1%. In 2017, the global average medical trend rate was 8.2%and the average general inflation rate was 2.8%.

“Aon expects further medical cost escalation due to globalpopulation aging, overall declining health, poor lifestyle habitsbecoming pervasive in emerging countries, continuing cost shiftingfrom social programs, and increasing utilization ofemployer-sponsored plans,” the authors write.

The top-reported conditions giving rise to adverse claimexperience around the world are cancer, cardiovascularailments such as high blood pressure, diabetes andrespiratory conditions, according to the report. The keyreported global risk factors that are expected to drive futureclaims are high blood pressure, physical inactivity andobesity.

“Noncommunicable diseases are the biggest contributors to theadverse experience driving high medical inflation,” the authorswrite. These types of diseases “are directly linked to modernlifestyles, and their incidence can be significantly reducedthrough modification of individual behaviors. Influencing thesebehaviors presents both a challenge and an opportunity foremployers.”

The most impactful elements of medical plan costs around theworld are hospitalization, clinics/labs and physicianservices. The methods most commonly reported for mitigatingthe increase in the costs of a medical planare wellness initiatives, cost containmentand access and delivery restrictions.

There are geographic variations in costs andstrategies to mitigate medical plan costs, according to thereport. For example, European employers are likely to see thelowest increase in costs next year, while Latin American and MiddleEastern and African employers are focused on preventativestrategies like vaccination programs to control costs.

Across the globe, the practice of requiring employeecost-sharing in medical plan costs is growing, either by employeessharing in medical premium costs, or in medical claim outlays.

“The findings addressed in this report suggest that employersneed to accelerate their efforts in helping employees to bothunderstand their own health risks and begin to take steps toimprove their health,” the authors write. “Rising costs and theincreased prevalence of chronic conditions are global phenomena—andregardless of the underlying medical insurance system, employerswill experience added organizational cost and lost workforceproductivity if these trends continue.”