Healthcare benefits costs stabilize, but larger hikes loom

The cost of providing employee healthcare benefits has stabilized around the globe, although a new round of increases may be on the horizon for employers.

The 2014 Towers Watson Global Medical Trends Survey found that the cost of employee healthcare benefits is projected to increase 8.3% globally this year, slightly higher than the 7.9% and 7.7% increases experienced in the past two years.

The smallest average increases are expected to continue throughout Europe, where economic and competitive pressures are keeping costs down, while average increases in the Asia-Pacific, Middle East/Africa and Americas regions (not including the U.S.) are projected to remain above worldwide averages.

“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,” says Francis Coleman, director, international consulting, at Towers Watson. “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.”

Canada experienced a trend of 11% in 2013 and is expected to have similar a trend in 2014. It’s estimated that 70% of this increase is driven by drug pricing. The report notes that some Canadian employers have benefited from generic drug pricing reforms and have experienced a below-average trend for the past couple of years.

Medical claims
Cardiovascular disease causes the highest incidence of medical claims across regions. It has the highest incidence of all regions in the Middle East/Africa, with respiratory illness second. Cancer is second across all other regions.

Although cancer hasn’t yet replaced cardiovascular disease as the leading condition, as insurers predicted in prior surveys, it has significantly increased in prevalence in Asia-Pacific and Europe. Globally, the claim incidences for respiratory illness have increased since 2012, although gastrointestinal illness has decreased in all regions except Asia-Pacific.

Musculoskeletal/back conditions have increased in prevalence overall since the 2012 survey, driven primarily by increased claims in Europe and the Americas. Respondents rank it among the top three conditions in Canada, Spain and the United Kingdom.

The survey was completed by 173 medical insurers in 58 countries. Most participants have at least a 10% share of the group medical insurance market in their country.

Related articles: