The healthcare industry has been grappling with rising global medical costs for years, and a new survey suggests that these challenges are unlikely to ease anytime soon.
Insurers around the world are projecting medical costs to rise by 10.4% in 2025, according to the recent WTW Global Medical Trends Survey. This will be the third consecutive year that global medical costs have increased by double digits. There was a 10.4% increase in 2024 and a 10.7% increase in 2023.
“With medical cost increases remaining at double-digit levels, employers will need to manage budget expectations and balance cost increases with data-driven business and health outcomes,” said Linda Pham, global health and risk leader of Integrated & Global Solutions at WTW, in a statement. “The seemingly never-ending rise in costs poses a constant challenge for employers to take action in order to mitigate these unsustainable increases.”
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WTW is a global advisory, broking and solutions company. The survey was conducted between June and August 2024 and included responses from 348 health insurers across 75 countries. The company also received input from WTW local brokers in 55 countries. As a whole, the survey covers 90 countries.
Projected medical cost increases vary by region, according to WTW. Costs are expected to rise by 8.7% in North America, 10.1% in Latin America, 12.3% in Asia Pacific, 9.4% in Europe and 12.1% in Middle East/Africa.
Several key factors are driving the ongoing rise in medical costs, WTW stated. The development of new medical technologies and pharmaceuticals has significantly contributed to the global increase in care costs. Public healthcare systems worldwide are struggling to keep up with high demand and limited resources, prompting many individuals to turn to private medical providers. Additionally, healthcare utilization has surged in recent years, particularly in mental health services, further driving up the overall cost of care.
These increases are expected to persist long-term. About 64% of insurers expect “higher or significantly higher” global medical trends over the next three years, according to the survey. In addition, 67% of insurers anticipate more global demand for healthcare services over the same time frame.
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There are ways that employers can address rising healthcare costs, however.
“Employers should prepare for cost increases in 2025 and beyond, as the costs of healthcare and demand for healthcare services is projected to increase over the next three years,” said Lindsey Loy Blau, associate director of Integrated and Global Solutions at WTW, in an email. “While recognizing that some factors may be out of their control, employers can hone in on key actions to drive the value and effectiveness of their healthcare plans. Some examples include promoting preventive care, considering targeted behavioral intervention programs and other solution-specific vendors, and optimizing benefit spend through steps such as a pharmacy coverage and utilization review.”
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