ARLINGTON, Va., Oct. 13, 2022 (GLOBE NEWSWIRE) -- Widespread inflation and increasing healthcare utilization are combining to drive projected increases in global healthcare benefit costs to their highest level in nearly 15 years, according to a survey of global medical insurers conducted by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company. The survey found little relief in sight, with over three-fourths of insurers (78%) anticipating higher or significantly higher increases over the next three years.
The 2023 Global Medical Trends Survey reveals that the healthcare benefit cost trend rose from 8.2% in 2021 to a higher-than-anticipated 8.8% in 2022 — and is projected to rise yet further in 2023 to a stubbornly high global average of 10%. The cost trend increases will hit many regions, including Latin America (where average increases are projected to climb from 18.2% to 18.9%), Asia Pacific (climbing from 6.9% to 10.2%), and the Middle East and Africa (climbing from 10.5% to 11.5%).
Even Europe, which has traditionally seen much smaller cost increases, is not excluded from the record levels of trend. For 2023, average increases in Europe are expected to rise to 8.6% versus 8.0% in 2022. The one region with an expected decrease in medical trend is North America, where trend is projected to drop from 9.4% in 2022 to 6.5% in 2023, although employers are not necessarily seeing this yet.
“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,” said Eric McMurray, global head of Health & Benefits, WTW. “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.“
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% |
+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.
The leading driver of medical costs, according to insurers, continues to be overuse of care (74%) due to medical professionals recommending too many services or overprescribing. Over half of insurers (52%) also indicate that insured members’ poor health habits are among the top factors. The underuse of preventive services (50%) is also a significant cost driver and increased year over year due to, in part, the avoidance of medical care during the pandemic.
Insurers identified cancer, cardiovascular and musculoskeletal as the top three conditions by cost, identical to last year’s findings. Interestingly, respondents ranked musculoskeletal as the top condition by incidence of claims this year compared with ranking it fifth last year.
The survey also revealed telehealth continues to gain traction in health delivery and cost management, moving up from number three in last year’s survey to number two this year. Insurers again ranked contracted networks of providers (70%) as the most effective method for managing medical costs.
“Healthcare affordability remains top of mind for insurers, employers and employees. 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 [diversity, equity and inclusion] initiatives globally, all while dealing with potential recessionary markets,” said Francis Coleman, managing director, Integrated & Global Solutions, WTW.
About the survey
WTW conducted its 2023 Global Medical Trends Survey between July and September 2022. A total of 257 leading insurers representing 55 countries participated in the survey. The U.S. medical trend data are drawn from other WTW research.
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you. Learn more at wtwco.com.
