By Pension and Benefits Editorial Staff
Employer-provided health care benefit costs are expected to increase modestly around the globe in 2019, according to a recent survey of medical insurers by Willis Towers Watson. 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 2019 Global Medical Trends Survey found medical insurers globally are projecting health care benefit costs to rise 7.6 percent in 2019, a slight increase over 7.1 percent this year. The smallest increases (5.0 percent) are projected in Europe while the largest increases are expected in the Middle East and Africa, where costs are projected to jump 12.4 percent. Cost increases in the Americas, excluding the U.S., are expected to decline slightly but still increase at double-digit levels (10.7percent). Health care benefit cost increases in the U.S. are expected to decline slightly, from 8.7 percent this year to 7.9 percent next year.
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 percent) expect higher or significantly higher medical trend costs over the next three years; however, 60 percent of Middle East and African insurers and 54 percent of insurers in Europe anticipate higher costs. Globally, nearly half of insurers (49 percent) 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 percent) in the Americas and 66 percent of Middle East and Africa insurers believe pharmacy costs will increase either modestly or significantly over the next five years. The vast majority of insurers, except those in the Middle East and Africa, also think the cost for behavioral and mental health care will increase modestly or significantly in the future.
When asked for the most significant cost-driving factors outside the control of employers and vendors, nearly two-thirds (65 percent) cited the high cost of medical technology followed by providers’ profit motives (48 percent). Interestingly, seven in 10 insurers (70 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. Just over half (52 percent) cited overuse of care due to employees seeking inappropriate care.
“We know from our research and consulting that insurers and employers are working to develop programs that aim to stem rising medical costs and improve employee health. While traditional cost management programs remain popular, employers will also look to enrollment technology, telemedicine and other innovative design programs to better engage employees and help them make smarter health decisions,” said Francis Coleman, managing director, Health and Benefits, Global Services and Solutions, Willis Towers Watson.
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