Benefits and Compensation

Health Benefit Costs Still Rising Worldwide, Survey Finds

The cost of employer-provided healthcare benefits around the globe continues to climb with little relief in sight, according to a survey of health insurers by Willis Towers Watson. Insurers attribute this trend to the cost of hospital/inpatient and outpatient medical services, advanced medical technology, and the overuse and overprescribing of services.


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The 2017 Willis Towers Watson Global Medical Trends Survey found that medical insurers globally are projecting the cost of healthcare benefits to rise 7.8% this year, an increase from 7.3% in 2016. On a regional basis, Latin America projects the largest increases, driven by very high rates of inflation in some countries. The Middle East and Africa region is also projecting large increases (9.8%). Europe continues to show the lowest level of increase. U.S. insurers project a 7.5% increase this year, slightly less than they experienced in 2016.

Survey respondents were mostly pessimistic about the near-term outlook for reining in health benefit costs. A majority of insurers in all regions except the Middle East and Africa expect these costs to trend higher over the next 3 years.

“Controlling rising medical costs is without question a top priority for insurers and employers around the world,” said Cecil Hemingway, Willis Towers Watson’s cohead of health and benefits, in a statement. “While progress is being made in some regions to stem costs, the vast majority of respondents continue to grapple with how to rein them in,” he said. “And it’s not for a lack of effort or innovation. In fact, more employers are implementing both traditional and innovative approaches to managing rising costs.”

When asked for the most significant external factors driving these cost increases, nearly two-thirds of respondents (63%) cited the high cost of medical technology, followed by providers’ profit motives (40%). Among employer and provider behaviors, three in four insurers (74%) ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs. More than half (54%) cited overuse of care due to employees seeking inappropriate care.

According to the survey, increasing numbers of employers are offering preventive care and empowering employees to take responsibility for their own health. Globally, four in 10 respondents (39%) offer well-being programs. In the U.S., three-quarters now offer these programs, while just about half of insurers in Europe offer them. These offerings are projected to grow—some significantly—in the next year, the survey noted.

Health promotion and wellness programs are also gaining traction. Nearly two in three respondents (65%) now offer personal health risk assessments with another 16% planning to do so next year. Second medical opinions are offered by 71% with another 11% planning to do so. Notably, nearly half (48%) of insurers offer lifestyle and health education programs, and nearly 65% are expected to do so next year.

“Well-being initiatives hold great promise for addressing non-communicable diseases as well as ones that arise from lifestyle choices such as smoking, poor eating habits and lack of regular exercise,” said Francis Coleman, head of health and benefits, global services and solutions, for Willis Towers Watson. “While respondents’ health promotion programs continue to grow globally, we believe insurers can work more closely with employers to better understand employee population health risks and employees’ preferred ways of using them, while providing enhanced metrics and standardized reporting.”

Willis Towers Watson, a global advisory, broking, and solutions company, conducted the survey in October and November 2016. It reflects responses from 213 leading medical insurers operating in 79 countries.

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