The largest increase in 15 years is driven by inflation and increased healthcare utilization.
According to results from the 2023 Global Medical Trends Survey, a survey of global medical insurers conducted by the multinational insurance advisor company Willis Towers Watson Public Limited Company (WTW), widespread inflation and increasing use of health care together are projected to drive benefit costs to their highest levels. Additionally, three-fourths of insurers (78%) expect a higher or significantly higher increase over the next three 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 press 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.”
The survey found that healthcare benefits cost rose higher than expected from 8.2% in 2021 to 8.8% in 2022. This number is now projected to uptrend to a 10% global average increase in 2023. One region that is expecting a decrease is North America, where it’s projected to drop from 9.4% in 2022 to 6.5% in 2023.
Here’s a look at the numbers globally:
“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 initiatives globally, all while dealing with potential recessionary markets,” Francis Coleman, managing director, Integrated & Global Solutions at WTW, said in the same press release.
According to participants in the survey, the leading drivers of medical cost increases is the overuse of care due to overprescribing and service recommendations by medical professionals (74%); poor health habits by insured members (52%); and the underuse of preventative services (50%).