Employer healthcare costs, such as private medical insurance, have increased by more than 50% in the last five years, according to HR consultancy Aon Hewitt.
Aon Hewitt’s Benefits & Trends Survey of 480 UK employers found that 67% of them have experienced rising healthcare premiums, with the average UK employer typically spending more than £500 per employee every year on health insurance.
However, as costs rise, employers are actually looking to reduce health budgets, with 69% of respondents wanting to reduce the cost of their healthcare benefits.
And with Aon Hewitt predicting that cost increases will beat inflation this year, many employers could struggle to make savings in this area.
Colin Bullen, UK head of health consulting at Aon Hewitt, said: “Employers are in a quandary. Ill health represents a major issue, costing on average between £2,000 and £3,000 per employee in total, which includes the direct and indirect costs of sickness absence, healthcare benefits and health management.
“Providing a comprehensive and integrated health and wellbeing programme, which includes benefits such as health insurance, is vital if companies wish to limit this burden on their business and productivity. However, the inflation in costs – particularly insurance – is a real concern.
“Aiming to achieve a sustainable long-term reduction in healthcare expenditure should be employers’ main objective. Short-term cost cutting may seem attractive, but short-term imperatives do not always match with long-term savings in healthcare.”