Healthcare costs are continuing to rise, with about three-fifths of insurers expecting increases over the next few years, a new survey revealed. However, there seems to be slight easing, with healthcare costs anticipated to increase at a slower pace in 2024 compared to 2023.
The Willis Towers Watson Global Medical Trends Survey, published Wednesday, was conducted between June and August. It includes responses from 266 insurers representing 66 countries. About 41% are based in Asia Pacific, 24% are based in the Americas, 24% are based in Europe and 11% are based in the Middle East and Africa.
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Globally, health benefit costs are expected to increase 9.9% in 2024, according to the report. The rise is at a slightly slower pace than in 2023, which saw a record-high increase of 10.7%. In 2022, there was a 7.4% increase in global health benefit costs.
“Several factors are contributing to this decline [in 2024],” the report stated. “The spike in elective procedures, consultations and other medical care resulting from delayed or postponed care due to the pandemic is starting to ease.”
Linda Pham, senior director of integrated and global solutions at WTW, noted that while there is a projected slight “ease” in cost increases in 2024, “they remain at significantly high levels.”
There are also differences based on region, WTW showed. For example, in Europe, health benefit costs are expected to increase by 9.3% in 2024, lower than the 10.9% increase in 2023. In the Middle East and Africa, healthcare costs are anticipated to rise by 12.1% in 2024, versus an 11.3% increase in 2023.
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“In some regions, ongoing geopolitical conflicts and resulting displaced populations have negatively affected medical costs due to an increased need for care and reduced availability of providers,” Pham said in a statement.
Insurers said that the highest driver of medical costs is the overuse of care, with 59% of respondents stating this. About 49% said that members’ poor health habits are a major contributor to healthcare costs, while another 47% blamed the lack of preventive services.
The biggest change insurers made to their medical portfolio in 2023 was adding well-being services, with 54% of respondents doing this, according to the survey. Another 41% added telehealth services in 2023.
“Insurers recognize that telehealth provides opportunities to manage healthcare costs more effectively,” the report said. “Telehealth and virtual care help reduce the need for costly emergency room visits and provide cost-efficient access to specialists, especially in the area of mental health.”
While the survey featured health insurers, the findings have implications for employers too.
“Employers are facing both higher cost increases as well as the potential for significant volatility, making it even more difficult to budget and plan. Faced with this environment, inaction is not an option. Employers must understand their risk tolerance, review their current offerings to ensure optimal value and explore strategies to balance cost pressures with the need to support the employee experience. By understanding the factors that affect healthcare and drive costs in their populations, employers can effectively combat the ever-present threat of rising costs,” said Debby Moorman, head of health and benefits, North America at WTW, in a statement.
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