UAE, Gulf employers will find it hard cutting group medical insurance costs
Going lower on medical cover benefits puts employers at risk in retaining talent
Dubai: Will UAE and Gulf employers drop more benefits from their group medical insurance as inflationary costs start to bite deeper?
At the start of this year, some businesses did offset higher costs by trying to pay lower on their annual group insurance costs. It’s a strategy laden with risk as employers keep battling to retain key talent – and not have to lose them to competition willing to pay more and do better on incentives.
“Insurance buyers will already be aware of the need for careful cost management, as workplaces feel the effect of general inflation on businesses and employees,” said Julio Garcia-Villalon, Benefits Leader in Middle East and Africa at Mercer Marsh. “They will also need to ask careful questions of insurers to understand the full extent of aspects of coverage such as mental health support and digital innovation.”
Managing this can be quite a balancing act. Through recent years, group medical insurance covers have seen the individuals having to pay up to 20 per cent on a co-payment basis. And they also find that their latest insurance cover no longer allows them to seek consultation or treatment at their regular hospital or clinic.
Employers elsewhere in the region are also experimenting with how much they can save on group insurance. The Mercer Marsh survey found 44 per cent of organizations across MEA would consider reducing coverage to manage costs.
“The knock-on effects of COVID-19 on cost, coverage, claims and plan management are clear in these findings,” said Garcia-Villalon.
These are the main findings from the Mercer Marsh survey:
• Per-person medical cost increases are back to pre-pandemic levels.
The research found the global medical trend rate (the year-over-year cost increase for claims under a medical scheme on a per-person basis) for 2021 was 10.1 per cent. This marks a return to pre-pandemic levels (2019: 9.7 per cent), after a drop to 5.7 per cent during 2020.
Insurers reckon 2022 and 2023 rates will exceed 2019, hitting 12.7 per cent and 12.6 per cent. “Inflation and concerns about other economic shocks will inevitably play a part,” said Garcia-Villalon. “However, other factors such as later-stage diagnoses and increased volume of claims as a result of COVID-19 are significant contributors to medical trend.
“Employers should plan for a higher inflation and medical trend environment, but will need to balance economy and empathy..”
• COVID-19 continues to impact claims experience.
Globally, infection fears are now manifesting themselves through delayed diagnosis. More than half of insurers report seeing more later-stage illness diagnoses in claims due to deferred care.
“Insurers in MEA reported respiratory conditions as the top cause of claim costs in 2021 and one of the three most frequent causes of claims along with diseases of the circulatory system, and endocrine and metabolic diseases,” the official added. “Delayed diagnosis has meant that respiratory conditions and other chronic illnesses are being detected at a later stage, when it is more difficult and costly to treat.”
• Plan modernization
Nearly three quarters insurers now offer a telemedicine service, and should be a permanent part of their provision. In MEA, 31 per cent are including an app to find the right doctor or medical care when and where the user needs it.
• Mental health gaps
Although insurers have increased coverage, 19 per cent of insurers in MEA continue to exclude mental health care. Even among those that do offer cover, less than half are supplying communication on mental topics, like how to access crisis support lines.
• Plan management
Nearly one in ten insurers in MEA are adjusting coverage based on COVID-19 vaccination status, and 22 per cent are treating long-Covid as a pre-existing condition. That will require more rigorous plan management from employers.
“Expense sub-limits and annual/lifetime maximums can unintentionally shift costs onto employees, making care unaffordable,” the report says. “It is therefore important to review plan design annually, keeping the concept of employee affordability front of mind.”