UK firms already struggling with rising inflation, slowing growth and a lending squeeze will have to contend with an 8% rise in medical costs this year too, according to new research.
The study by global consultancy Watson Wyatt Worldwide has predicted the above-inflation increase will lead to firms taking a long hard look at the sorts of services they offer and what areas they prioritise.
The research came out of a wider global study of what insurance companies expected to be paying in medical costs this year.
Elliott Hurst, a senior consultant at Watson Wyatt, said even just a 5% rise would prompt employers to review their plan designs and healthcare strategies.
“Factors such as reduced waiting times for NHS treatment and the apparent rationalisation of new, higher-cost drugs, bring into question where traditional employer medical plan designs will offer ‘added value’ to employees in the future,” he pointed out.
“Some employers may decide to move the focus of their medical benefits away from timely access to treatment, private rooms and a choice over hospitals and specialists, and towards providing employees access to drug therapies and other treatments that the NHS will not, for cost reasons, be prepared to offer,” he added.
The one consolation for firms was that the UK, if anything, was likely to experience lower medical cost inflation than many other countries, particularly those in Asia, Africa and Latin America.
In Europe, most insurers, except those in Italy, said they were projecting single digit increases, although all said they expected higher trends over the next five years.
A separate study by the consultancy also found stress is now the most frequently cited reason for American employees to consider leaving their jobs, yet few employers were taking steps to address it.