Employee health care costs rise across EMEA, says Mercer Marsh

HEALTHCARE

Employee health care costs rise across EMEA, says Mercer Marsh

The cost of providing health-related benefits for companies in Europe, Middle East and Africa rose by an average of 3.6% in 2012, up from 3.4% a year previously, according to a new survey conducted by Mercer Marsh Benefits.

The biggest cost pressures were the increasing utilisation of health services, the growing complexity and expense of medical procedures and the impact of large claims, such as those for cancer treatment.

Cost pressures varied across the surveyed countries:

• Rising utilisation of health services was the most commonly cited reason for cost increases by respondents in the UAE, Spain and Portugal.
• The majority of UK companies attributed the cost increase to the impact of large claims.
• Companies in France pointed to the impact of regulatory and legislative changes as having the most impact - a new law in France obliges companies to implement a minimum supplementary health scheme if nothing is in place.

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Key survey findings

• 65% of respondents rank “improving employee engagement and satisfaction” as one of their top three benefit programme priorities. “Cost control” (55%) is ranked second, followed by “ensuring benefits competitiveness” (47%).
• 83% of respondents consider benefits as a key attraction and retention tool.
• 76% of respondents provide private medical insurance to all of their employees and to their dependents.
• While coverage for employees is almost always subsidised, 26% of respondents require employees to pay the full cost of dependent coverage.

Health benefit costs as a percentage of payroll

• Health benefit costs as a percentage of payroll averaged 3.9% in 2011, the latest complete financial year at the time of the survey.
• Respondents in the UAE reported significantly higher average costs (5.9% of payroll), followed by Turkey (4.5%), Spain (4.2%) and the UK (3.5%).
• France (3.3%), Portugal (2.9%) and Italy (2.8%) reported the next highest cost, but were below the regional average.
• Germany and Poland both spent around 2.4% of payroll on health benefits costs.
• By contrast, in the US, employer-sponsored health benefits account for about 13% of total payroll cost.

Managing costs

Asked about steps they will take to manage the cost of their health benefits:

• Relatively few employers reported that they are likely to restrict benefit eligibility (12%).
• Rather more suggested that they would cut back on the scope of benefits offered (17%) or shift more cost to employees (16%).
• Employers seem more inclined to address the workforce health issues driving cost than to cut back on health benefits: two-fifths (40%) say they are likely to invest in employee wellness programmes to reduce health risks. This is understandable given that more respondents are concerned about offering a competitive health benefits package (56%) than about the cost of health benefits (47%).

A final word

“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.

“What is surprising to us is that, despite all this, nearly four out of ten companies lack the data needed to provide them with an understanding of what is driving their costs and how they can control them.” - David Levey, the regional business leader for Mercer Marsh Benefits.

Want to know more?

Title: EMEA Health Care, Mercer Marsh Benefits, May 2013.

Survey details: The survey solicited responses in October 2012 from more than 500 companies across 16 countries in EMEA. The report provides insights into healthcare and benefits trends across the region.

Availability: To purchase your copy of the survey visit www.mercer.com/EMEA-health-care-report.

Mercer Marsh Benefits operates from 135 countries worldwide. It provides clients with “health and other benefits programmes designed to fit their business goals and improving their employees’ satisfaction and overall health and welfare”.

Mercer is a “global leader in talent, health, retirement, and investments. Mercer helps clients around the world advance the health, wealth, and performance of their most vital asset – their people.” Mercer’s 20,000 employees are based in more than 40 countries. For more information, visit www.mercer.com.