Healthcare benefit costs will be a problem globally in 2023, with insurers anticipating an average increase of 10% from 2022, the biggest increase in about 15 years, a new survey found.
The Willis Towers Watson survey received responses from 257 insurers from 55 countries between July and September.
The 10% jump is higher than in past years. From 2020 to 2021, there was an 8.2% increase globally. From 2021 to 2022, there was an 8.8% increase globally. Most insurers don’t expect this to get better any time soon, either: 78% anticipate higher or significantly higher increases in the next three years.
Increases to healthcare benefit costs vary by region, the report found. Latin American insurers are anticipating the largest increase in 2023, of 18.9%. The Middle East is projecting an 11.5% increase, Asia Pacific expects a 10.2% increase, Europe expects an 8.6% increase and North America anticipates a 6.5% increase.
This will require innovative solutions, said Eric McMurray, global head of health and benefits at WTW.
“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 insurers to think and act differently to address these issues in a meaningful way,” McMurray said in a news 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.”
Most of the insurers, or 75%, blamed the overuse of care for the rise in medical costs. This includes medical professionals recommending too many services or overprescribing medications. Another 52% credited people’s poor health habits, and 50% said the underuse of preventive services. The latter is largely driven by people avoiding care during Covid-19, the report said.
The top medical conditions driving costs are cancer, musculoskeletal disorders and cardiovascular disorders, the insurers reported. Mental health, meanwhile, was ranked fourth, and respondents said they anticipate this continuing to rise.
When it comes to managing costs, 70% of insurers said having a contracted network of providers is important. Telehealth was also listed as a popular way to help control medical costs, the report found.
The findings serve as a warning for employers, who may face a challenging financial year.
“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 [diversity, equity and inclusion] initiatives globally, all while dealing with potential recessionary markets,” said Francis Coleman, managing director of integrated and global solutions at WTW, in the news release.
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