The outlook for global healthcare benefit costs offers some major swings, depending on location, according to an annual survey from Willis Towers Watson.
Getting healthcare costs under control continues to be a never-ending challenge among employers and benefits professionals.
In a recent survey from Willis Towers Watson, which polled 296 leading medical insurers operating in 79 countries, the situation remains daunting on the global stage in the coming year. One area of healthcare in particular, mental health, will rise the most over the next five years, according to the poll.
Willis Towers Watson, a global advisory, broking and solutions provider, found in its 2020 Global Medical Trends Survey medical insurers globally are projecting healthcare benefit costs to continue to rise – with average increases in the five regions ranging from 4.3% in Europe to 11.7% in Latin America. The good news for US employers is the average increase for 2020 (7.2%) is down for the third straight year (8.7% in 2018 and 7.9% in 2019).
In addition, the study also found that 40% of all respondents expect medical costs will continue to increase at a higher rate over the next three years. Asia Pacific insurers are the most optimistic, with 32% agreeing there will be a moderate increase over the next three years, while 12% believe costs will be lower. Conversely, more than half (54%) of Middle East and Africa insurers believe medical expenses will increase, and virtually none anticipate lower costs.
Also, 27% predict that mental health conditions will be among the three most common conditions affecting costs within the next five years, with 26% believing that these conditions will be among the most expensive. Currently, cancer (83%), cardiovascular diseases (55%) and conditions affecting musculoskeletal and connective tissue (46%) are the top three conditions by cost and are expected to remain so in the near future.
“Controlling rising health care benefit costs remains a top priority for medical insurers and employers globally,” says Cecil Hemingway, managing director and global co-head of Health and Benefits, Willis Towers Watson, adding that despite the regional variation, cost increases continue to outpace inflation and remain unsustainable, making affordability a challenge for employers and employees alike.
“Employers that take steps now to understand the factors driving up costs and evaluate how they deliver health care benefits will be better positioned to manage costs in the years ahead,” he says.
When asked for the most significant cost-driving factors outside the control of employers and vendors, 70% cited the high cost of medical technology, followed by providers’ profit motives (47%). Interestingly, 73% ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behavior, while 66% cited overuse of care due to employees seeking inappropriate care. Both figures represent an increase from 2019.
“The potential impact of mental health conditions is getting the attention of insurers and employers worldwide,” says Francis Coleman, managing director, Health and Benefits, Global Services and Solutions, Willis Towers Watson. “As the demand for mental health services increases, employers can expect upward pressure on costs and challenges to existing health care models.”