Pension & Benefits News Global health care benefit cost increases will vary widely in 2020
Tuesday, December 10, 2019

Global health care benefit cost increases will vary widely in 2020

By Pension and Benefits Editorial Staff

Employer-sponsored health care benefit cost increases are expected to vary widely around the globe in 2020, according to research from Willis Towers Watson. The 2020 Global Medical Trends Survey found mental health conditions are expected to become one of the most significant cost factors over the next five years. Medical insurers globally are projecting health care benefit costs to continue to rise across the world in 2020. Average increases in the five regions will range from 4.3 percent in Europe to 11.7 percent in Latin America.

The study also found that 40 percent of all respondents expect medical costs will continue to increase at a higher rate over the next three years. Asia Pacific insurers are the most optimistic, with 32 percent agreeing there will be a moderate increase over the next three years, while 12 percent believe costs will be lower. Conversely, more than half (54 percent) of Middle East and Africa insurers believe medical expenses will increase, and virtually none anticipate lower costs.

“Controlling rising health care benefit costs remains a top priority for medical insurers and employers globally,” said Cecil Hemingway, managing director and global co-head of health and benefits at Willis Towers Watson. “Despite the regional variation, cost increases continue to outpace inflation and remain unsustainable, making affordability a challenge for employers and employees alike. Employers that take steps now to understand the factors driving up costs and evaluate how they deliver health care benefits will be better positioned to manage costs in the years ahead.”

According to the survey, more than a quarter of insurers (27 percent) are predicting that mental health conditions will be among the three most common conditions affecting costs within the next five years, while 26 percent predict these conditions will be among the most expensive. Currently, cancer (83 percent), cardiovascular diseases (55 percent), and conditions affecting musculoskeletal and connective tissue (46 percent) are the top three conditions by cost and are expected to remain so in the near future.

When asked for the most significant cost-driving factors outside the control of employers and vendors, seven in 10 respondents (70 percent) cited the high cost of medical technology, followed by providers’ profit motives (47 percent). Interestingly, 73 percent 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. Two-thirds (66 percent) cited overuse of care due to employees seeking inappropriate care. Both figures represent an increase from 2019.

“The potential impact of mental health conditions is getting the attention of insurers and employers worldwide. As the demand for mental health services increases, employers can expect upward pressure on costs and challenges to existing health care models," said Francis Coleman, managing director, Health and Benefits, Global Services and Solutions at Willis Towers Watson.


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