Businesses invest in preventative healthcare as medical inflation rises 

More than two thirds (67 per cent) of businesses are investing in preventative healthcare to tackle rising medical costs, according to Howden Employee Benefits. 

Howden said medical inflation is set to reach 7 per cent in 2026, net of Consumer Price Index (CPI), meaning total inflation could exceed 10 per cent once CPI is accounted for. 

The findings appear in the Changing Face of Employee Health report, which draws on input from insurers, employers and employees across multiple regions worldwide. 

The report found that 93 per cent of employers expect medical costs to rise and 41 per cent anticipate a significant rise. 

Howden said the pressure is driving employers to re-think health provision, with 67 per cent using prevention and wellbeing measures as a strategy to mitigate costs. More than half (55 per cent) said it was the most effective approach they had used. 

Investment levels vary by region. In Europe, 74 per cent of employers are investing in prevention and wellbeing measures, compared with 72 per cent in the UK and 71 per cent in Latin America. The figure stands at 69 per cent in the Pacific region, 56 per cent in Asia and 55 per cent in IMEA. 

Howden said health benefits are also becoming a key factor in recruitment and retention. More than three in five (61 per cent) employees said they are more likely to stay with an employer that offers a good healthcare package, while 47 per cent said it is important when looking for a new role. Only 7 per cent said it is not an important benefit. 

The report also highlights a gap between employer perceptions and employee experience. While 93 per cent of employers believe their current health plan meets employee needs, a quarter (25 per cent) of employees do not agree that their employer supports their wellbeing. 

Employers are also reviewing provider arrangements in response to rising costs. Nearly a quarter (23 per cent) have already switched healthcare providers to get a better deal, while 39 per cent are planning to do so. 

Glenn Thomas, UK chief executive and global practice leader of health and employee benefits at Howden, said employers are facing fast-moving change driven by new treatments, AI and rising costs. He said leaders need benefits that are cost-effective and fit for employees. 

According to the report, the direction of travel is clear: prevention and wellbeing are increasingly central to employers’ plans as healthcare inflation accelerates. 

ENDS