Healthcare costs are showing no signs of abatement all around the world—a fact, experts say, that should spur employers to get creative with solutions.
Global healthcare costs are projected to jump 10% in 2023—the highest level in nearly 15 years, according to data from Willis Towers Watson, which surveyed 257 insurers. The survey found little relief in sight, with more than three-fourths of insurers (78%) anticipating higher or significantly higher increases over the next three years.
The increases, unsurprisingly, are the result of a number of factors that have had an impact on costs, including widespread inflation, economy instability and increased healthcare utilization as a result of the pandemic.
All of those factors “require employers and insurers to think and act differently to address these issues in a meaningful way,” Eric McMurray, global head of health and benefits, WTW, said in a statement.
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Other issues driving medical costs? Those include overuse of care (74%) due to medical professionals recommending too many services or overprescribing; poor health habits (cited by 52% of insurers); and the underuse of preventive services (50%)—a problem that has worsened over the last few years as many people avoided medical care because of COVID-19.
Furthermore, insurers identified cancer, cardiovascular issues and musculoskeletal conditions as the top three conditions by cost, identical to last year’s findings.
The consulting firm’s 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 more in 2023 to a high global average of 10%. The cost trend increases will hit most regions, including Latin America (where average increases are projected to climb from 18.2% to 18.9%), Asia Pacific (climbing from 6.9% to 10.2%), and the Middle East and Africa (climbing from 10.5% to 11.5%). Average increases in Europe—which traditionally sees smaller health cost increases, WTW notes—rise to 8.6% versus 8% in 2022.
Some slightly good news for U.S. employers: North America has an expected decrease in the trend, where cost increases are projected to drop to 6.5% in 2023 from 9.4% in 2022. Experts have previously warned, however, that healthcare costs overall won’t decrease unless employers make such changes as expanding access to virtual care through telemedicine or digital health resources, convincing employees to use preventive care measures and taking advantage of high-performance networks.
WTW also notes that U.S. employers haven’t yet experienced any relief in healthcare cost trends.
“Old solutions will not work,” McMurray says. “Cost-shifting is not an option. There’s a critical need for innovation, strategy and new solutions to have any substantive impact. Those that don’t lead will fall behind in their ability to manage cost and retain key talent.”
