Global healthcare benefit costs expected to jump 10% in 2023
Increases in global healthcare benefit costs are expected to hit their highest levels in roughly 15 years, according to a new survey of insurers, conducted by Willis Towers Watson. Worldwide, a 10% increase is expected for 2023.
WTW’s 2023 Global Medical Trends Survey found that 78% of global insurers are bracing for higher or significantly higher cost increases in the next three years. Those projections vary by region: Europe can anticipate an 8.6% increase next year; cost increases for Latin America are expected to hit a staggering 18.9%. North America is the one outlier within the report, with cost growth expected to drop to 6.5% over 2022’s 9.4% increase. But for employers struggling to manage costs while prioritizing talent retention, that projected relief may feel elusive.
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“Healthcare affordability remains top of mind for insurers, employers and employees,” Francis Coleman, managing director of integrated and global solutions at WTW, said in a release. “As we move into next year, we see a challenging year for employers in trying to balance the convergence of rising medical trend, salary pressures and the need to continue to make progress on DEI initiatives globally, all while dealing with potential recessionary markets.”
Global medical trends:Healthcare benefit cost growth, 2021 – 2023
2021
2022
2023 projected
Global+
8.2%
8.8%
10.0%
North America
9.1%
9.4%
6.5%
Latin America+
15.1%
18.2%
18.9%
Asia Pacific
9.8%
6.9%
10.2%
Europe
5.6%
8.0%
8.6%
Middle East/Africa
12.4%
10.5%
11.5%
*WTW: Global and regional trend rates are weighted based on GDP per capita. Due to the hyperinflationary nature of the Venezuelan economy, Venezuela has been excluded from Latin America regional and global totals.
In addition to challenging economic factors, the lingering impact of the pandemic is also increasing costs, as many consumers’ and employees’ relationship with healthcare has shifted in recent years.
“Worldwide general inflation, overall instability in the global economy, increased healthcare utilization in the wake of the pandemic and a dynamic labor market require employers and insurer to think and act differently to address these issues in a meaningful way,” Eric McMurray, global head of health & benefits at WTW, said in a release. “Old solutions will not work. Cost shifting is not an option. There’s a critical need for innovation, strategy and new solutions to have any substantive impact. Those that don’t lead will fall behind in their ability to manage cost and retain key talent.”
According to 74% of insurers, that increase in care utilization also reflects an overuse of care, caused by providers’ overprescribing and making too many healthcare recommendations.
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Cancer, cardiovascular conditions and musculoskeletal conditions are significant drivers; MSK conditions were identified by respondents as the top condition by incidence of claims this year, in contrast to last year’s ranking, in which it placed fifth. A silver lining: telehealth continues to prove its value in both care delivery and cost management.
“To help manage and optimize benefit spend in 2023, we expect employers will need to look at more innovative options, such as new digital point solutions, which are expanding globally,” Coleman told EBN. “Many of these virtual or telehealth options could be incorporated in traditional health benefits to improve access to care and outcomes for areas with high claims incidence such as musculoskeletal or better mental health options. In adding these, employers will also need to review health and risk designs to ensure there is no duplication of coverage to ensure they realize the full value. Employees should also welcome these virtual and digital solutions to help improve their speed and ease of access to services.”
