News: Employer-provided healthcare benefit costs expected to increase modestly in 2019

#GlobalPerspective

Employer-provided healthcare benefit costs expected to increase modestly in 2019

The growth in costs raises concerns over approaches to health care service delivery.
Employer-provided healthcare benefit costs expected to increase modestly in 2019

Employer-provided health care benefit costs around the globe are expected to rise 7.6% in 2019 –a slight increase over 7.1% this year, according to 2019 Global Medical Trends Survey of medical insurers by Willis Towers Watson, a global advisory solutions company. Insurers blame the high cost of medical technology and the overuse and overprescribing of services as the major cost-driving factors and caution that soaring pharmacy costs will become a significant factor over the next five years.

The smallest increases (5.0%) are projected in Europe while the largest increases are expected in the Middle East and Africa, where costs are projected to jump by 12.4%. Cost increases in the Americas, excluding the U.S., are expected to decline slightly but still increase at double-digit levels (10.7%). Health care benefit cost increases in the U.S. are expected to decline slightly, from 8.7% this year to 7.9% next year, according to other research.

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%) expect higher or significantly higher medical trend costs over the next three years; however, 60% of Middle East and African insurers and 54% of insurers in Europe anticipate higher costs. Globally, nearly half of insurers (49%) expect cost increases will be higher or significantly higher.

“Rising health care costs continue to be a major issue for insurers and employers globally as increases continue to outstrip inflation by more than a two-to-one margin and are unsustainable over the long term,” said Cecil Hemingway, managing director and global co-head of Health and Benefits, Willis Towers Watson. “To better control costs, many employers are taking a close look at how they design and deliver health care benefits. This includes 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, insurers are predicting that pharmacy costs will become an increasingly significant part of medical expenses over the next five years. Eight in 10 insurers (80%) in the Americas and 66% of Middle East and Africa insurers believe pharmacy costs will increase either modestly or significantly over the next five years. 

When asked for the most significant cost-driving factors outside the control of employers and vendors, nearly two-thirds (65%) cited the high cost of medical technology followed by providers’ profit motives (48%). Interestingly, seven in 10 insurers (70%) 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.  

Insurers also report cardiovascular (54%), musculoskeletal (49%) and cancer (42%) as the top three conditions that cause the highest number of claims. However, the prevalence of other conditions such as diabetes and mental health are increasing rapidly. 

Topics: Global Perspective, Compensation & Benefits

Did you find this story helpful?

Author

QUICK POLL

Are you satisfied with the recognition practices offered by your employer?

On News Stands Now
q_auto,f_auto/v1544221064/mag-december-2018.png

Subscribe now to the All New People Matters in both Print and Digital for 3 years.

For HR, 2018 was about a lot of 'anticipation' - from tech to gig economy. But what business trends and strategic priorities will most impact HR's agenda in 2019? This issue will compile the biggest priorities for HR in 2019.

Subscribe
And Save 59%

Subscribe now