Widespread inflation and increasing healthcare use are combining to drive projected increases in global healthcare benefit cost to their highest level in nearly 15 years, according to a survey of global medical insurers by WTW, a global advisory, broking and solutions company.
The survey found little relief in sight with 78% of insurers anticipating higher or significantly higher increases over the next three years.
The leading driver of medical costs continues to be overuse of care (74%) due to medical professionals recommending too many services or overprescribing. Customers’ poor health habits are among the top factors. The underuse of preventive services is also a significant cost driver.
Insurers identified cancer, cardiovascular and musculoskeletal as the top three conditions by cost.
Telehealth continues to gain traction in health delivery and cost management. Insurers again ranked contracted networks of providers (70%) as the most effective method for managing medical costs.
The 2023 Global Medical Trends Survey reveals that the healthcare benefit cost trend rose from 8.2% in 2021 to a higher than anticipated 8.8% in 2022 and is projected to rise yet further in 2023 to a high global average of 10%.
The cost trend increases will hit many regions including Latin America, where average increases are projected to climb from 18.2% to 18.9%, Asia Pacific (6.9% to 10.2%), and the Middle East and Africa (10.5% to 11.5%).
Even Europe, which has traditionally seen much smaller cost increases, is not excluded from the record levels of trend. For 2023, average increases in Europe are expected to rise to 8.6%, versus 8.0% in 2022. The one region with an expected decrease is North America where trend is projected to drop from 9.4% in 2022 to 6.5% in 2023, although employers are not necessarily seeing this yet.
These large increases are unsustainable. Employers and insurers will need to develop strategies and solutions to rein in costs to more manageable levels.
Global medical trends: Healthcare benefit cost growth 2021- 2023
Healthcare affordability remains top of mind for insurers, employers and employees. 2023 will be a challenging year for employers in trying to balance the convergence of rising medical cost trends, salary pressures and the need to continue to make progress on initiatives globally, all while dealing with potential recessionary markets.
WTW conducted its 2023 Global Medical Trends Survey between July and September 2022. 257 insurers representing 55 countries participated in the survey.