The data, taken from a survey of medical insurers by Willis Towers Watson, suggests costs will increase globally by 0.5 per cent, from 7.1 per cent last year, with the Middle East/Africa region predicted to experience the highest rise, up 12.4 per cent.
|Americas (ex. U.S.)||11.1%||11.0%||10.7%|
Insurers blame the high cost of medical technology and the overuse and overprescribing of services as the major cost-driving factors. They warn that soaring pharmacy costs will become a significant factor over the next five years.
The 2019 Global Medical Trends Survey found the smallest increases are projected in Europe, where a 5 per cent increase is expected. The rate at which costs are rising in the US is expected to decline slightly, from 8.7 per cent this year to 7.9 per cent next year.
In the UK, medical insurance cost increases are projected to hit 6.3 per cent in 2019, which is a slight decrease compared to this year’s rise of 6.9 per cent. Between October 2015 and June 2017, insurance premium tax (IPT) doubled from 6 per cent to 12 per cent and is cited as one of the contributing factors to higher costs during this period.
The study also found the outlook for cost increases over the next three years varies greatly by region. Only a third of insurers in the Americas – 34 per cent – expect higher or significantly higher medical trend costs over the next three years, compared to 60 per cent of Middle East and African insurers and 54 per cent of insurers in Europe.
Insurers reported that musculoskeletal, cardiovascular, and cancer are the top three conditions that cause the highest number of claims in Europe, responsible for 66, 54 and 43 per cent of claims respectively. Respondents don’t expect the situation to change in the next five years. It found 64 per cent use contracted networks, while 60 per cent require pre-approval for scheduled inpatient services to help manage costs. The research found 64 per cent of insurers place limits on certain medical services to help control costs.
Willis Towers Watsonmanaging director and global co-head health and benefits Cecil Hemingway says: “Rising health care costs continue to be a major issue for insurers and employers globally as increases continue to outstrip inflation by a two-to-one margin and are unsustainable over the long term.
“While some employers are cautiously optimistic that future cost increases will hold steady or increase only slightly, concerns linger over how medical treatment is being provided, the reliance on pharmacy services, and the cost implications of innovative future treatments, all of which can fuel sharp cost increases down the road.”
According to the survey, European insurers are predicting that costs for hospital and inpatient care (52%) and behavioural and mental health care (50%) will become an increasingly significant part of medical expenses over the next five years. This is in contrast to other regions, with eight in ten insurers (80%) in the Americas and 66% of Middle East and Africa insurers expecting the bulk of medical expense increases to come from pharmacy costs over the next five years.
When asked for the most significant cost-driving factors outside the control of employers and vendors, 65 per cent cited the high cost of medical technology followed by providers’ profit motives, cited by 48 per cent. Seven in ten insurers ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behaviour. Just over half – 52 per cent cited overuse of care due to employees seeking inappropriate care., , Willis Towers Watson managing director health and benefits, global services & solutions Francis Coleman says: “We know from our research and consulting that insurers and employers are working to develop programmes that aim to stem rising medical costs and improve employee health. While traditional cost management programmes remain popular, we expect insurers and employers will look closely at telemedicine, second medical opinion services and other innovative design programmes that can help to control costs and meet the needs of their employees.”