Health Reform WK-EDGE Global health care benefit cost increases expected to jump by more than 8 percent in 2021
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Wednesday, October 28, 2020

Global health care benefit cost increases expected to jump by more than 8 percent in 2021

By Lauren Bikoff, MLS

Although health care benefit cost increases are expected to remain stable in the U.S., developing regions are projected to see medical costs accelerate much faster.

Employer-sponsored health care benefit costs are expected to increase by more than 8 percent around the globe next year following a year in which the pandemic has had a significant impact on health care utilization and overall costs, according to a survey of medical insurers by Willis Towers Watson. The 2021 Global Medical Trends Survey found that medical insurers globally project health care benefit costs will take a sudden drop in 2020 before rebounding to 8.1 percent in 2021, up from 5.9 percent this year and 7.2 percent in 2019. Average increases in the five regions next year will range from 5.8 percent in Europe to 13.6 percent in Latin America. Health care benefit cost increases in the U.S. are expected to remain stable at 7.3 percent next year, according to other Willis Towers Watson research.

The study also found that 67 percent of respondents expect medical costs will continue to accelerate over the next three years. Almost 90 percent of Middle East and Africa insurers expect higher medical trends over the next three years followed by insurers in Europe (77 percent). Only 40 percent of Asia Pacific insurers expect a higher medical trend.

"The pandemic undoubtedly had a major impact on slowing trend increases this year as it sparked a sharp decline in non-urgent surgeries and elective care," said Francis Coleman, managing director at Willis Towers Watson. "While most, but not all, countries experienced a decrease in trend this year, that is expected to be short-lived. In fact, we expect to see significant volatility in 2021 results, which are dependent on the impact of COVID-19 and whether a vaccine becomes available early in the year, who pays for it and the extent of its availability. In addition, there is uncertainty about how COVID-19 testing and treatment costs for 2021 will continue to be split between government, insurers and employers."

According to the survey, cancer (80 percent), cardiovascular diseases (56 percent), and conditions affecting musculoskeletal and connective tissue (41 percent) are the top three conditions currently affecting medical costs. Interestingly, about four in 10 respondents predict mental health conditions will be among the three most common conditions affecting costs within the next 18 months (40 percent), and among the three most expensive in the next 18 months (39 percent).

When asked for the most significant cost-driving factors outside the control of employers and vendors, just over half of respondents (51 percent) cited the high cost of medical technology, followed by providers’ profit motives (36 percent) and epidemics and global pandemics (34 percent).

"Further uncertainty around medical trend lies ahead as we start to see the true impact of delayed treatment in 2020 and the long-term effects on those who contracted COVID-19. Nevertheless, COVID-19 has greatly accelerated the adoption and use of telehealth, which could help to offset those potential higher costs and provide a more efficient way for insureds to access and use health care in the future; however, it may also boost utilization due to ease of access and add to overall costs," said Emma Tekstra, managing director at Willis Towers Watson.

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