Cost of providing health benefits rising across EMEA

The cost of providing health-related benefits for organisations in Europe, the Middle East and Africa (EMEA) rose by an average of 3.6% in 2012, according to research by Mercer Marsh Benefits.

Its EMEA health care survey, which questioned more than 500 organisations across 16 countries in EMEA, found that the biggest drivers of cost in 2012 were increasing the use of health services, the growing complexity and expense of medical procedures, and the impact of large claims.

The research found that cost pressures varied across the surveyed countries. The rising use of health services was the most commonly cited reason for cost increases by respondents in Spain, Portugal and the United Arab Emirates (UAE).

The majority of UK respondents attributed the cost increase to the impact of large claims.

Respondents in France pointed to the impact of regulatory and legislative changes as having the most impact; a new law in France obliges employers to implement a minimum supplementary health scheme if nothing is in place.  

The cost of health benefits as a percentage of payroll averaged 3.9% in 2011, the latest complete financial year at the time the survey was conducted. Respondents in the UAE reported the highest average costs, at 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 costs, 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.

The research also found, when respondents were asked what steps they would take to manage the cost of their health benefits, only 12% would be likely to restrict benefit eligibility. A further 17% would cut back on the scope of benefits offered, while 16% would shift more cost to employees.

Two-fifths (40%) of respondents are likely to invest in employee wellness programmes to reduce health risks. More than half (56%) are concerned about offering a competitive health benefits package.

David Levey (pictured), regional business leader for Mercer Marsh Benefits, said: “Organisations across EMEA are under pressure to keep costs low, but they are also responding to a rapidly changing health and benefits landscape.

“Organisations 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 10 organisations lack the data needed to provide them with an understanding of what is driving their costs and how they can control them.”