The cost of employee health-care benefits around the globe is increasing, driven by the higher cost of hospital and inpatient services, medical technology and the overuse of services, according to a new survey by Willis Towers Watson.
Its 2016 Global Medical Trends Survey, which reflects responses from 174 medical insurers in 55 countries, found respondents are projecting the cost of health-care benefits to increase 9.1 per cent this year, an increase from eight per cent in 2015 and 7.5 per cent in 2014.
Respondents in the Americas (not including the U.S.) and Middle East/Africa regions are projecting double-digit average increases for the third straight year. The European region continues to show the lowest level of increase.
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“Rising medical costs continue to be a major issue for employers,” said Cecil Hemingway, co-head of health and benefits at Willis Towers Watson, in a news release. “In the decade of running this survey, we have seen global medical trend continue to hover at double-digit levels in many countries.
“However, the results by country can vary greatly. Some countries are seeing the rate of increases slowing while others are experiencing medium-term increases driven by demographics and economics, which could give way to a longer-term slowing of cost increases.”
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The highest expenses driving the increases are hospital and inpatient services. However, when asked for the most significant cost-driving factors outside the control of employers and vendors, 58 per cent cited the high cost of medical technology and 44 per cent cited providers’ profit motives.
Three-quarters (75 per cent) of respondents ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs when it comes to employee and provider behavior.
“While employers and vendors can’t control the cost of medical technology, they can mitigate the cost and overuse of services by making employees better health-care consumers,” said Francis Coleman, senior leader of health and benefits, Global Services and Solutions at Willis Towers Watson.
“Encouraging prevention and implementing wellness programs are just two examples of how to accomplish this. Employers can also implement provider and vendor management programs to better control overuse of services.”
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The survey also found that 58 per cent of respondents currently offer a personal health risk assessment/appraisal program either directly or through a partner. Another 14 per cent plan to offer a program in the next 12 months. A similar percentage (58 per cent) offers biometric screenings, with another six per cent planning to offer them.
More than three-quarter (78 per cent) of respondents place limits on certain medical services to help manage costs. Some 57 per cent use contracted networks, while 56 per cent require pre approval for scheduled inpatient services.
“Insurance companies worldwide have significant opportunities to help employers reign in rising medical costs and improve employee health,” said Coleman. “Insurers that can work with employers and create benefit programs that meet ever-changing needs, provide useful and timely data, and help incorporate wellness initiatives into their health programs will gain competitive advantage.”
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