Anupama Sahay
MMB Multinational GBM & Darwin, Asia Pacific Leader
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Singapore
As the cost of health and benefits programmes continues to soar, it is imperative for employers to take steps to actively manage them. While protecting the health and well-being of their workforces, they also need to evolve the rewards mix to optimise spending and maximise return on investment. At the same time, organisations are coming under increasing regulatory and legislative pressures, making it even more important to identify and get ahead of any emerging gaps in the governance of their rewards programmes.
The relentless surge of health and benefits costs is the number-one people risk for HR and risk professionals across the world right now, according to our People Risk 2024 research involving 4,575 HR and risk professionals. Global medical trends have seen double-digit increases every year since 2021. And our research shows they are projected to rise by a further 11.7% in 2024, fuelled by growing medical inflation, altered treatment mixes, advances in health technology and increased rates of utilisation following the COVID-19 pandemic.
The situation is causing anxiety among employers that, for years, have built their rewards programmes around core health benefits. Leaders are starting to ask themselves: “If our health benefits become too expensive to provide, how can we possibly fill the gap? What is the role of the employer? How do we manage our organisational health risks? How will we continue to attract, retain and engage our top talent?”
Meanwhile, significant regulatory and legislative changes are putting even greater pressure on organisations. Rewards teams find themselves working within rapidly changing boundaries, with new rules around pay transparency, pension plan enrollment and retirement investment funds impacting employers across many regions, including the EU, US, UK, Canada, Brazil and Australia.
Given the twin pressures of rising costs and increased regulation, many organisations struggle to see the way forward. According to People Risk 2024, 36% of HR and risk managers feel they have limited strategies to control costs beyond simply reducing benefits, and 40% are concerned that the HR function will have to spend more time and resources on managing benefits programmes. And 46% are uneasy about the degree of due diligence now expected when assessing rewards and benefits providers across a range of dimensions — including their environmental, social and governance (ESG) credentials.
While this is undoubtedly a difficult set of circumstances, the situation is manageable provided that organisations take a whole-system approach to health and benefits.
An effective strategy will combine all these elements — prioritising employee well-being, optimising vendor relationships, establishing robust governance frameworks and leveraging digital solutions for efficient benefits administration. By following these steps, organisations can successfully navigate the evolving landscape of health and benefits programmes and enhance the value and sustainability of their rewards packages, even in the face of increasing cost and regulatory pressures.
MMB Multinational GBM & Darwin, Asia Pacific Leader
Singapore
MMB Multinational GBM & Darwin, Asia Pacific Leader, Mercer Marsh Benefits
United Kingdom
Expertise
07/11/2024