Employers risking health cost increases of 9%, warns Aon

British businesses are spending on average nearly 9% more on providing private healthcare for their employees since their last renewal, according to research conducted by employee risk and benefits firm Aon Consulting.

However, despite the increasing costs associated with providing healthcare benefits, employers are still committed to their provision citing various drivers for continued provision, Aon said.

An Aon survey of 653 employers of various sizes found that the main reason for employers continuing to provide healthcare benefits are so they can offer a competitive benefits package (67% of respondents). Slightly fewer (56%) said they did so because promoting employee wellbeing is part of their corporate social responsibility. A similar number (53%) said they did so in order to ensure employees returned to work quickly after experiencing an illness (53%).

However, cost control remains "high on the agenda" for most employers, with nearly a third (29%) of companies planning on actively redesigning their private healthcare, to institute cost-control strategies.

Nevertheless, a "considerable" number of firms plan to introduce further health benefits, Aon said. More than a third (39%) of companies surveyed were considering introducing a dental plan, while a similar number (37%) could introduce health screening to their organisations.A quarter (26%) of employers said they were considering introducing employee assistance programmes, but fewer (16%) said they thought health cash plans could be introduced.

Alex Bennett, head of health consulting at Aon Consulting, said that while there is "no doubt" that healthcare costs are increasing, Aon has seen 22% of organisations either experiencing a rate decrease or no change at all to their rates.

"If companies are faced with 9%+ increases in the cost of their healthcare benefits, they should take steps to ensure that better terms cannot be arranged by more effective broking and insurer leverage or through re-designing benefits," he said.

Participants in the survey were drawn from a range of industries, including financial services, industrials and support services, technology/telecoms professional services, and others. Participants were largely HR professionals (22%), compensation and benefits professionals (11%) and finance professionals (21%).

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