The cost of providing healthcare and health-related benefits to employees in Europe rose by 3.3% in 2010, a sharper increase in many economies than was seen in salaries and general inflation. Companies in the UK and Ireland experienced a higher-than-average increase of 4.9%. By comparison, in the U.S. average health benefit cost per employee rose 6.9 percent in 2010.
The data was gathered as part of Mercer’s 2010 pan-European survey on employer health benefits. The survey was conducted in 14 European countries with responses from 556 employers. Health benefits include private medical plans and a range of other health-related benefits, including income support, critical illness cover, employee assistance programmes, dental and optical benefits, health screening, gym membership, and wellness programmes.
Medical cost increases are driven by advances in medical research and technology, which results in development of ever more effective – and expensive – diagnostic tools and medical procedures. In addition, aging populations and financial uncertainty mean that governments are cutting health-care benefit protection levels in response to shrinking public spending budgets.
Steve Clements at Mercer says, “Governments are shifting the cost of healthcare to employers and individuals in the form of tighter tax deductions, reduced scope of public healthcare services, privatisation, higher cost sharing and eligibility restrictions or opting-out schemes. From the other direction, employers are also under pressure from employees and trade unions to improve health benefits.”
The survey showed that private medical plans, which include both mandated and voluntary supplemental plans, are offered by nearly all respondents (93 percent) from countries with government model health systems, including Ireland, UK, Portugal, Spain and Italy. In contrast, private medical coverage is offered by just under three-quarters (74 percent) of respondents in social insurance model countries, such as Austria, Czech Republic, France, Germany, Poland, Switzerland and the Netherlands.