Health Benefits Costs Expected to Increase Globally

May 16, 2014
Laura Joszt

Although the cost of employee healthcare benefits stabilized globally, they could increase by 8.3% this year, according to a new survey.

Although the cost of employee healthcare benefits stabilized globally, they could increase by 8.3% this year, according to a new survey.

The 2014 Towers Watson Global Medical Trends Survey found the expectation is that the global medical trend will stay ahead of the US medical trend in the short term. In 2013, costs increased by 7.9%—similar to the 7.7% in 2012—but are expected to increase by 8.3% this year, according to 173 leading medical insurers in 58 countries.

“While the cost of providing healthcare benefits to employees has stabilized over the past few years, controlling rising costs remains a significant concern for employers worldwide,” Francis Coleman, director of International Consulting at Towers Watson, said in a statement. “In fact, in all regions, health costs continue to rise at twice the rate of inflation. That’s a major concern for employers, with many insurers projecting costs to again escalate in the coming years.”

According to responses, more than half of health insurers in all regions anticipate higher or significantly higher medical trend over the next 3 years. The trend in the Middle East/Africa has seen the largest increase over the last 3 years, while Europe’s has remained very low.

The biggest concern (75%) among insurers is that providers will drive up costs by overprescribing or recommending too many services, followed by the belief that plan participants are seeking inappropriate care (45%). The third leading factor was insureds’ poor health habits, according to 38% of insurers.

While cardiovascular problems and cancer remained the leading conditions, there was an increase in claims because of respiratory, musculoskeletal, and mental health issues.

“While we are starting to see greater availability in claim reporting among insurers globally, concerns remain over coding and reporting consistency, since a surprising one-third of respondents are not using a recognized international coding standard such as ICD-9 or -10,” Coleman said.

The top programs to manage costs are placing limits on certain services (71%), contracted provider networks (63%), and preapproval for inpatient services (68%).

“Interest in wellness and well-being strategies has been on the rise throughout the regions over the past few years,” Henriette Coetzer, MD, global medical director at Towers Watson, said in a statement. “Insurers are recognizing that multinational employers are steadily seeing the value in promoting healthy lifestyles to their workers and families, and are taking steps to meet this increasing demand.”