Mercer: Medical inflation hits ten per cent

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Mercer: Medical inflation hits ten per cent

Tue 15th Jul 2008

Medical inflation is running at ten per cent this year, according to proprietary data analysed by consulting and investment firm Mercer.

At this rate, a medical plan costing an employer £1 million in 2008 will cost around 60 per cent more in five years' time.

Company medical plans may need to change as pensions have recently done, Mercer claims.

The cost of providing medical cover for employees and their dependents has apparently risen by 67 per cent since 1999.

Steve Clements, principal in Mercer's health and benefits business, said the current inflation rate "isn't sustainable" and that companies face an "increasing challenge" to maintain cover for their employees.

He warned that, like pensions, companies may move medical plans from defined benefit to defined contribution and move to cap liabilities.

Earlier this month, Clerical Medical reported that pensioner inflation had risen 36 per cent in the last ten years.

Rising house costs were a key driver.

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