Small and medium-sized enterprises (SMEs) across sectors and geographies have proven agility and adaptability in the face of the largest pandemic in history, and developed business models and offerings to ensure business survival in the face of increased public regulation. I changed my ways. After three years of adapting to significant business disruption, many markets around the world are seeing rising prices for corporate health insurance, but the trend appears to be more common among small businesses. .
Medical expenses are on the rise
Healthcare costs are increasing in most areas. Over the next three years, more than three-quarters of his health insurers (78%) expect medical trends to grow even more or significantly. Over this period, 84% of European insurers, 73% in Asia-Pacific, 69% in Latin America and 60% in the Middle East and Africa expect their healthcare costs to increase or significantly increase.
This global pattern of healthcare inflation (increasing cost per unit of the same service) is expected to continue beyond 2023. According to recent projections, healthcare inflation is expected to rise the most in the Asia-Pacific region, and is projected to continue rising. from 6.9 percent to 10.2 percent. Latin America (18.2% to 18.9%) and the Middle East (10.5% to 11.5%) are expected to see slightly higher costs. Europe, which has historically seen low levels of cost growth, is now expected to face record cost increases from 5.6% to 8.6%.
Figure 1, Source: WTWNorth America is the only region with lower forecast figures, projected to drop from 9.4% to 6.5% in 2023. Inflation is expected to ease in 2023, but US employers are still concerned about costs and volatility, with inflation expected to fall to 6.5% from 9.4%. I still felt the positive effects. The high cost of new medical technologies and the demand of healthcare providers for higher profit margins continue to have a significant impact on healthcare spending. Insurers also point to broader concerns that affect these costs, including declining quality and funding of public health systems and geopolitical crises.
Expensive health insurance impedes small business growth
A U.S.-based survey of the small business health insurance market found that 95% of small business owners feel their health insurance costs have increased in the past four years, and 56% expect their medical costs to increase annually. It turned out that they were estimating 10%. that’s all. When asked how rising health insurance costs are impacting their businesses, small business owners surveyed said that increasing the prices of their products and services would reduce their costs. had to be passed on to the customer. We are also noticing that rising health insurance costs are impacting our competitiveness in talent acquisition, delaying growth plans such as major equipment purchases. 37% of respondents said they do not offer health insurance because it is too expensive.
Sixty-eight percent of global insurers surveyed by Mercer predicted that employers will prioritize enhancing plans that address employee attraction, retention and engagement compared to cost control and containment in health plans. Insurers estimate that, internationally, less than one-third (32%) of plan sponsors cut coverage to cut costs. This perspective is likely influenced by larger trends in the workplace, such as talent shortages, the changing nature of the workforce, and changing employee expectations.
combat medical inflation
Healthcare inflation hits small businesses more severely than large businesses. Unlike large companies, SMEs do not have the advantages of large insured populations, greater bargaining power with health insurers, and full-time HR support. As a result, these companies are often left with limited options when faced with rising health insurance premiums.
Analyst firm GlobalData notes that the health of the small business insurance market depends on the number of small businesses in each country, so if liquidations start to rise, the number and value of policies will decline. Surviving SMEs will need to cut costs significantly, including insurance coverage. Given that 90 percent of businesses worldwide are SMEs and account for 50 percent of all employment, this could have far-reaching implications for the economy as a whole.
Ben Carey-Evans, senior insurance analyst at GlobalData, said geopolitical uncertainty continued in Europe, inflation, energy prices remained high and the cost of living crisis showed no signs of ending. says. “In addition to rising inflation, consumers are facing higher mortgage rates, which will likely affect both homeowners and renters as landlords are likely to raise their rents. , consumers will have less disposable income to spend, and the impact on small businesses will be even greater.”
Insurers may need to prioritize customer retention, even if it means temporary loss of profits. A short-term solution might be to offer adaptive insurance to retain customers. As the COVID-19 pandemic continues to pose significant challenges for businesses, there is growing interest in the return of payment holidays and the potential for flexible payment terms. These measures have been widely used in the early stages of the outbreak, and many experts say they could prove valuable again in helping companies in distress. thinking. Insurers may have found better solutions to prevent complete customer churn by allowing customers to toggle certain policies on and off to manage their payments more effectively. . “This is going to be a tough year for insurers in the small business market and the level of concern is very high. Insurers with good communication will be most likely to complete the increasingly difficult renewals,” Carrie Evans added.
In the Middle East, Abu Dhabi’s recent flexible health insurance program for entrepreneurs and investors has shown the potential to be a replicable model for the underserved SME segment in the global insurance market. . In response to growing market needs and to enhance the emirate’s status as an attractive travel destination, the new insurance option offers treatment of the equivalent of AED 150 to investors and free trade license holders, their families and employees. More insurance options to cover service costs. 000 per year. “Initiatives such as flexible health insurance make it easier for companies, especially start-ups, to enter the business world,” said Hala Khaled Al-Amelie, Executive Director, Abu Dhabi Office of Competitiveness (COAD), ADDED. said in a statement. .
Other insurance includes 100 percent emergency coverage, 20 percent copayment for all outpatient treatment services, and 30 percent copayment for medications. The program also offers the possibility to upgrade insurance coverage according to the patient’s needs. The feasibility of this model globally remains to be seen, as factors affecting access to affordable health insurance for SMEs may vary across regions and health systems.
This article appeared in Omnia Health magazine.Read the full article online now
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