In this Human Capital Insight episode of the On Aon podcast, specialists from Aon's Global Benefits team discuss how organizations can turn benefits strategy into a workforce advantage. As healthcare costs continue to outpace inflation across many markets, employers are looking beyond cost management to make better decisions about workforce health, employee value and long-term business performance. The conversation explores how data, technology and governance can help leaders allocate resources more effectively, improve workforce outcomes and stay ahead in a rapidly evolving benefits landscape. It also examines how organizations can strengthen workforce health through prevention-focused strategies and more informed benefits investments.
Key Takeaways:
Experts in this episode:
Key Insights:
Key Moments:
(1:35) Why leading employers are shifting benefits strategy from cost containment to maximizing workforce value and outcomes.
(5:20) What the 2027 global medical trend outlook means for leaders and why moderation should not be mistaken for relief.
(9:00) How organizations are using prevention, workforce health and data-driven decision making to create long-term advantage.
Soundbites:
Andrew Cunningham:
“Global benefits leaders are operating in a really challenging environment at the moment. Costs remain under pressure, employee expectations are at all-time high, and different markets need to respond in different ways.”
Jill Malila:
“This really presents a great opportunity for organizations as they want to help employees navigate the system to get the information they need to make smart decisions around their benefits, help them understand more knowledge about what's available and give them guidance throughout that process.”
Dennis Perales:
“The most progressive organizations are looking beyond healthcare costs and asking how benefits can improve workforce outcomes more broadly and how they can most effectively communicate these benefits to achieve these outcomes.”
Andrew Cunningham:
Global benefits leaders are operating in a really challenging environment at the moment. Costs remain under pressure, employee expectations are at all-time high, and different markets need to respond in different ways.
Intro:
Hello and thanks for tuning into this week’s episode of On Aon.
Healthcare costs are still rising faster than inflation, while employees expect benefits that are easier to understand and use. In this episode, Aon’s Andrew Cunningham, Jill Malila and Dennis Perales explore how employers can balance cost control with employee value — using better data, technology and prevention to improve affordability, engagement and workforce health.
Let’s get started…
Andrew Cunningham
Welcome to the On Aon podcast. I'm Andrew Cunningham, Chief Client Officer for Human Capital at Aon and EMEA. And today we're looking at two major forces that continue to shape the global benefits agenda: the need to deliver greater employee value and the continued pressure of rising healthcare costs.
Aon's latest Global Benefits Trend Study shows that cost management remains one of the leading priorities for employers, but employers are also placing greater emphasis on whether benefits are understood, valued, and easy to use.
At the same time, the 2027 Global Medical Trend Rates report projects that medical costs, while easing, will continue to rise significantly faster than inflation in many markets.
So joining me today are Jill Malila, Senior Vice President for Global Benefits at Aon, who's gonna unpack some of the global benefit trends findings. And also Dennis Perales, Global Benefits Vice President at Aon. We will discuss their latest medical trend rates outlook as well.
So together we're going to go through the findings and what it means for employers and then also the practical actions that leaders should prioritize on the back of that.
So Jill, let's get started with one of the biggest tensions in the study. Cost management is right at the top of the priorities for global benefits leaders. And it has been for a long time. But at the same time, ensuring that benefits are highly valued by employees is just moving up and up the agenda.
When you talk to your clients, how are you seeing leading organizations balancing the cost discipline with delivering benefits experiences that really employees can value?
Jill Malila
Thanks, Andrew. When we think about cost management, it does really overwhelmingly keep the top position across all of the employers that responded to our recent study. But I think the conversation is evolving a little bit more because number two in our survey is that employers want to direct spend to higher value benefits. They are looking at what employees value and they want to make sure that they're allocating spend appropriately.
So, to do this, it's really recommended that you as an employer take a more disciplined approach and marry your outcomes of benefit investment with some of the more comprehensive components of your ecosystem.
So, you're going to want to make sure you're looking at a comprehensive review of what you're offering. You want to look at utilization, you want to look at retention, workforce performance, employee perspective and look at their interconnectivity on how they relate: what are the key drivers and functions. And then formalize this through a more consistent dashboard where you measure, monitor, and look at how you deliver throughout the year.
Andrew Cunningham
Brilliant, brilliant. And then I guess employee value is just increasingly shaped these days by the experience that employees have when they're navigating their benefits.
So, I mean, this brings together another theme that you see coming out in the study, which is around personalization, technology, and AI.
And so, I guess if employee expectations are changing and becoming more demanding, and AI is this just this huge emerging factor and area of investment for all employers at the moment, do you think we're moving towards a future where benefits are not just personalised, but they're actively guided through technology and employees are expecting AI-driven support?
Jill Malila
Yes Andrew, I think employees are really looking for the same experience that they get through their employer's benefit program that they get when they're doing things on their own independently.
And so, what they want is a personalized experience that's aligned with their lifestyles. And one of the challenges that we see most employers are facing is that only 29% of employees have a strong understanding of what's available.
And so, this really presents a great opportunity for organizations as they want to help employees navigate the system to get the information they need to make smart decisions around their benefits, help them understand more knowledge about what's available and give them guidance throughout that process.
So, there's a huge opportunity here to improve that employee experience and understanding of all that an employer is doing. AI is really seen as that trigger that and the potential to accelerate the process through targeted communications and delivery patterns.
So, we do see that used appropriately, that AI can help in a couple of ways. It can help improve employee understanding in a more targeted way. And it can also enable this to be done at a more cost-effective and personalized basis.
Andrew Cunningham
Fantastic. You and I both know, Jill — because we've been doing this for a long time — that technology has been such a huge enabler around this to the advancements that have happened, certainly over the last 12, 18 months. Just absolutely superb.
But I guess technology can help employees make better decisions, but employers are still really facing significant cost pressures, in particular to healthcare. So, the global medical trend rate is expected to moderate to about 9% in 2027, according to the latest Global Medical Trends Report.
Do you think employers should see this as good news? And maybe this is question for you, Dennis, but is this good news or is there a risk that we're misreading this? And what is it that really matters here?
Dennis Perales
Yeah, thanks, Andrew. Definitely good news and better than no moderation. Just to kind of get the stats in order, the projected global medical trend rate is 9% in 2027, and that's actually down from 9.8% in 2026.
But moderation doesn't mean relief. Healthcare costs are going to continue to rise, often much faster than general inflation and salary increases. But I think it's worth noting that the global average masks substantial market variation. So employers need local insight rather than a one-size-fits-all response.
While there's moderation in the global average in some important talent markets, such as Brazil and Singapore, we found that costs are actually expected to increase more than in prior years. Now, the overall rate of increase is easy.
But the affordability challenge has not gone away, nor have the underlying risk factors impacting medical conditions, meaning there is no guarantee that the moderation will continue.
Andrew Cunningham
Yeah. If the costs are still rising. I guess the obvious question becomes what's actually driving those increases and whether those drivers are actually changing over time.
Dennis Perales
Yeah, the clinical cost drivers we're seeing are largely cardiovascular, cancer and hypertension-related. Much of this has to do with lifestyle. These conditions are consistent with prior years, but continue having a significant impact on medical plans. Also contributing to rising costs are aging populations, an increased demand for healthcare services, and of course the use of AI.
The healthcare technology used to service employees is much more sophisticated nowadays and will only continue to advance at an exponential rate.
And lastly, rising rates of obesity and diabetes are becoming increasingly important factors in future healthcare costs. GLP-1 therapies are reshaping the conversation because they have implications for both healthcare spend and long-term workforce health outcomes.
Employers are increasingly focusing on prevention, well-being and data driven interventions alongside traditional cost management strategies aiming to achieve the employee value metric Jill mentioned earlier.
Jill Malila
And Dennis, if I might interject here, interestingly, our Global Benefit Trends Study, which focuses on strategy rather than outcome a little bit more, it actually showed that most benefits professionals see GLP-1 as a uniquely U.S. issue.
But what bears about in the latest global medical trend study is that it is an underlying factor in several geographies. Just make sure that you're dusting off your global footprint and looking at GLP-1s more holistically. Don't forget about other non-U.S. countries. Maybe a lesser issue, but definitely is coming up and showing up in our trend for 2027.
Dennis Perales
Yeah, I couldn't agree more. Right. And here's another statistic. Obesity continues to climb as a global health risk, rising from the fifth leading risk factor two years ago to third place in 2027.
Andrew Cunningham
Brilliant. Everything you just said there, Jill, I was thinking they're all conversations that we're having over in EMEA. So yeah. The broader strategic question, I guess, that we get into is that so many of these cost drivers are linked to chronic health conditions.
Should employers really be thinking differently about what success looks like when it comes to medical plans? You know, are we beginning to see or we're already seeing a shift from managing healthcare costs to proactively managing workforce health?
Dennis Perales
Yeah, so we're certainly seeing a clear shift from reacting to claims costs towards addressing the underlying drivers of workforce health. Chronic conditions such as cardiovascular disease, obesity, diabetes and hypertension are now shaping long-term benefits strategies.
Employers increasingly recognize that healthier workforces typically support better productivity, engagement and business outcomes.
And prevention, well-being.
Personalization and health navigation are becoming important components of cost management strategies. These components should be part of an employer's global minimum benefit strategy. Per the trend study, we're seeing plenty of opportunity for improvement here, where 33% of respondents have no minimum benefit strategy. That's actually up seven percentage points, but could indicate that organizations are self-assessing a bit better rather than regressing.
But the most progressive organizations are looking beyond healthcare costs and asking how benefits can improve workforce outcomes more broadly and how they can most effectively communicate these benefits to achieve these outcomes.
Andrew Cunningham
Yeah, that's super-interesting. So if you're a leader, a large multinational organization, what should we be doing? What should we be thinking about now? What do we do next?
Jill Malila
Yeah, I think I'll take this one to start with, Andrew.
So, employers really need to define the outcomes that matter and also make sure that these are outcomes that they can influence. Not everything is something that can be handled at a local level. So this actually means bringing some discipline to cost management where you're linking trends, utilization and claims together. You gotta link that data together so that you can deliver more effectively.
We also have found that having good governance does matter. Our survey showed that organizations with formal governance had clearer accountability and decision making and showed higher levels of employee understanding of their benefit programs. So those two things went hand in hand. So I'd suggest putting some rigor into what you're doing around your benefits benchmark scorecard and looking at that regularly as you go throughout the year.
Dennis Perales
I would say making cost management and ongoing operating discipline rather than something that we do periodic or periodic renewal exercise, right? Leaders should leverage all the data and technology available for continuous and complete optimization. This is gonna facilitate better communication and navigation support to help employees understand and use their benefits.
Andrew Cunningham
Brilliant. it's always great to hear you guys talking about what people should be doing and how you're supporting clients with it. I guess we've covered quite a lot here. If the listeners only remember one thing, what would you like them to remember about this?
Jill Malila
Yeah, I would say lead with your data. Benefits create value only when strategy, execution, and the employee experience come together and work as a cohesive ecosystem.
Dennis Perales
I would say a moderating trend rate is not a signal to step back. Employers have an opportunity to leverage better data and, with targeted action, employers can improve affordability and workforce health.
Andrew Cunningham
Brilliant. Thank you both. Thank you. You heard it here. Global benefits leaders are operating in a really challenging environment at the moment. Costs remain under pressure, employee expectations are at all-time high, and different markets need to respond in different ways.
So, the organizations best position to succeed will be connecting benefit strategy, healthcare insight, employee experience to make better decisions.
So, thank you, both Jill and Dennis, for joining us.
Thank you for listening to On Aon. You can find the 2026 Global Benefits Trend Study and also the 2027 Global Medical Trend Rates Report in the show notes below. Thanks very much.
Outro:
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We’ll be back next week with our Industry Insight, which will look at the latest news from the financial sector.