Globally, employers can expect a lower average Medical Trend Rate in 2021, as compared with 2020's reported projections, following the expected global decrease in general inflation.

According to Aon’s 2021 Global Medical Trend Rates Report, the global average Medical Trend Rate for 2020 is projected to be 7.2% and the global average general inflation rate to be 2.2% - down from 8.0% and 3.1% respectively in 2020.

With the exception of North America, the decrease will be echoed through all the regions, particularly in the Latin American & Caribbean region, where net trend Is also expected to reduce.

Zooming in on Asia Pacific, medical trend costs will drop to 8% in 2021, from the 8.7% projected for 2020. However, projected medical trend rates vary significantly by location in the region. 

Employer-provided medical benefit costs in Singapore expected to drop 30%

In Singapore, a nationwide decrease in medical plan utilisations due to the COVID-19 pandemic is likely to decrease medical trend rates next year. In line with that, growth in employer-provided medical benefit costs are expected to drop 30% in 2021 compared to the 2020's forecasts made prior to the pandemic.

Health plans saw significantly less utilisation in 2020 as people avoided hospitals in fear of COVID-19 infection and delayed their elective procedures. This community-wide decrease in plan utilisation is expected to reduce Singapore’s 2021 medical trend costs to 7% from the previously projected 10% in 2020.

The expectation for the new year is that inpatient care will spike back up whereas outpatient care will return to approximately 70% of pre-COVID-19 levels, and eventually normalise.

Elsewhere in Southeast Asia, the forecasted healthcare benefit cost growth are as follows: 

  • Indonesia
    • 2020 projected: 13.0%
    • 2021 forecast: 13.0%
  • Malaysia
    • 2020 projected: 14.0%
    • 2021 forecast: 14.0%
  • Philippines
    • 2020 projected: 9.2%
    • 2021 forecast: 8.0%
  • Singapore
    • 2020 projected: 10.0%
    • 2021 forecast: 7.0%
  • Thailand
    • 2020 projected: 13.9%
    • 2021 forecast: 6.6%
  • Vietnam
    • 2020 projected: 11.0%
    • 2021 forecast: 8.7%

Tim Dwyer, CEO of Health Solutions, Asia Pacific, Aon said: “COVID-19 has underscored the need for better design and management of employee health and benefit programmes. To mitigate medical costs by reducing chronic conditions, employers in Asia Pacific must invest in wellbeing programmes to promote mental health, physical activity, healthy eating, and preventive strategies like physical check-ups and screenings. This could supplement traditional strategies, such as controlling unreasonable plan utilisation, adjusting plan designs, narrowing networks and adding flexible benefit plans.”

Aon's report revealed further insights including the most prevalent health conditions driving healthcare claims, health risk factors, and risk mitigation methods.

The most important elements of medical plan cost in APAC are:

  • Hospitalisaiton - 95%
  • Clinics/ labs - 84%
  • Prescription drugs - 84%
  • Physician services - 74%
  • Maternity - 47%

In APAC, the most prevalent health conditions driving healthcare claims are: 

  • Cardiovascular - 100%
  • Cancer - 63%
  • Gastrointestinal - 58%
  • Musculoskeletal diseases - 58%
  • Ear, nose & throat (ENT) issues - 42% 

The report also confirmed the growing prevalence of health risk factors in the region which may drive future medical plan costs, including:

  • High blood pressure - 74%
  • Physical inactivity - 58%
  • Ageing - 47%
  • Bad nutrition - 42%
  • High blood glucose - 42%

Common methods that aim to best mitigate the increase in costs of a medical plan in APAC are: 

  • Wellness initiatives - 84%
  • Cost containment - 74%
  • Plan design changes - 63%
  • Flexible benefit plans to cap overall benefit costs - 47%
  • Changes in funding - 47%

aon global medical trend rates report


Photo and infographic / Aon

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