The cost of providing health-related benefits for companies in Europe, the Middle East and Africa (EMEA) soared by an average of 3.6% in 2012, new data from Mercer Marsh Benefits has revealed.
The main drivers fuelling rising costs in 2012 were reported as the increasing utilisation of health services, the growing complexity and expense of medical procedures and the impact of large claims such as cancer treatment.
The EMEA Healthcare Survey revealed varying cost pressures across different countries, with the majority of UK companies attributing the cost increase to the impact of large claims.
"Companies across EMEA are under pressure to keep costs low but they are also responding to a rapidly changing health and benefits landscape. Companies that operate across multiple countries with different health and social care systems and different workforce demographics have to tailor their programmes by market," commented Mercer Marsh Benefits regional business leader David Levey.
"What is surprising to us is that, despite all this, nearly four out of 10 companies lack the data needed to provide them with an understanding of what is driving their costs and how they can control them."
Mercer suggested that this disconnect could be a result of companies placing the highest priority on employee engagement and satisfaction. Almost two-thirds (65%) ranked it as one of their top three benefit programme priorities. This was followed by cost control (55%) and ensuring benefits competitiveness (47%).
Benefits were considered a key attraction and retention tool by 83% of employers.
Around three-quarters (76%) of employers provided private medical insurance to all employees and their dependents.
Just 12% of employers said they were likely to restrict benefit eligibility in order to manage the cost of their health benefits. Furthermore, 15% said they would shift more cost to employees and 17% suggested they would cut back on the range of benefits offered.
However, Mercer noted that employers appeared more concerned to address the workforce health issues that drive cost than to cut back on health benefits. Two-fifths (40%) said they were likely to invest in employee wellness programmes to reduce health risks.
Over half (56%) of respondents were concerned about offering a competitive health benefits package in comparison to 47% who were worried about the cost of health benefits.
Health benefit costs totalled 3.9% on average of payroll in 2011, the latest complete financial year at the time of the survey. The UK paid out just 3.5% of payroll costs in comparison to the UAE where costs were significantly higher at 5.9%, followed by Turkey (4.5%) and Spain (4.2%). Respondents in Germany and Poland spent just 2.4% of payroll on health benefits costs.
Better use of data would help to manage costs and provided additional support for the commitment that most EMEA companies have to improve workforce health, according to the consultant.
It noted that with the introduction of legislation by governments as part of health and social welfare reforms, obligations of corporate healthcare provision would increase and improved use of data would occur. In turn, management of healthcare costs would become a much higher priority.
