Health insurance costs continue to increase globally

27 July 2017 Consultancy.uk

Private health insurance costs have increased above the rate of inflation, with cancer and diseases of the circulatory system blamed as the main cost drivers. When it comes to major risk areas, however, proven links between the rise of metabolic disorders and related symptoms and decreasing quality of affordable food, coupled with workplace stress and environmental pollution suggest these hikes are punishing individuals for structural failures.

Outside systems of socialised medicine, “self-regulating” health has increasingly been cited by private insurance companies as being key to avoid getting stung by increasingly usurious premiums. Beyond state-provision, one model for health insurance is coverage provided by businesses – with the American health system relying on this heavily preceding the implementation of Obamacare. While businesses theoretically have an inherent interest in healthy employees however, this system also saw millions of Americans notably abandoned by the system if they could not find employment, or if their employer decided to cut back on their ‘benefits’ package, including the level of medical coverage they received, as a cost-cutting exercise to maximise profits.

A report into the insurance industry by Mercer has taken stock of the opinions of 220 insurers across 68 countries (notably excluding the US), to explore where enterprises might in fact benefit from taking a more active interest in the welfare of their staff. Researchers from the consulting firm highlighted that poor health, and risks related to covering their costs, continue to be prevalent globally, suggesting that structural conditions, such as diet, exercise, stress and pollution, are continuing to negatively affect human well-being outcomes.

Major cost conditions

Medical costs continue to rise rapidly well above inflation, topping a 10% increase in 2016, an increase which was particularly acute in developing countries. India for instance, saw costs increase by 15.3%, while Indonesia and Thailand saw increases of 13.1% and 12.5% respectively. Europe as a whole saw cost increases at a considerably lower than average 7.1%, with the continent hosting numerous states which control health industry prices through national insurance schemes somewhat insulating them from spiralling costs, although there were also considerable differences between West and Eastern Europe, the former seeing increases of around 2% - 6%. The UK, which continues to cite health premiums as a chief concern, saw an inflation adjusted cost increase of 5.3% for 2016, lower than the European average.

By region, Mercer’s research also identified the top three biggest treatment costs for 2016. Cancer was a considerable cost burden on Latin American insurers, situated in 84% of respondents’ top three, followed by Asia. Globally it came in the number one spot. Circulatory system related diseases followed, with particular prevalence in the Middle East / Africa, while respiratory conditions were a considerable cost burden in Asia and the Middle East / Africa, although hardly prevalent in Europe. Gastrointestinal disease was an outlier in Asia, with relatively little incidence across other regions.

Major risk factors

Respondents were also asked to identify the conditions that they believe have the biggest impact on medical costs. The top most cited risks, at more than 90% across all surveyed insurers, are related to metabolic and cardiovascular risk, which include, high blood pressure, high cholesterol, high blood glucose, overweight/obesity and physical inactivity. Respondents also cited poor diet as a key risk factor. A poor diet was broadly defined as one with a high carbohydrate intake, along with a low fibre intake featuring few vegetables, eating habits cited by an average 48% globally.

Emotional/mental risk was the third most cited issue, at 41% of respondents, relating to stress and sleeping disorders, as workplace pressures have intensified in the years following the international finance crisis, particularly as pay rates have continued to stagnate, piling monetary burdens on employees at home. Pollution was the forth most cited factor meanwhile, including indoor/outdoor air pollution, ozone, water sanitation along with climate change. The rapidly expanding economies of Asia, the Middle East and Africa noted the highest level of concern in this respect, as these regions have traditionally favoured economic growth fuelled by non-renewables.

Top five risk factors globally

Across the board by region, metabolic and cardiovascular risks are subsequently perceived as the biggest risk to care costs. Dietary risks rank second everywhere bar Europe, where emotional and mental risks take second place. While occupational risks takes the number four spot. Increased understanding of dangers posed by pollution have also propelled environmental risks to number five overall.

Summarising Mercer’s findings, Graham Pearce, the firm’s Global Consulting Group Leader, concluded, “With medical inflation again outpacing price inflation by a factor of nearly three, companies need to redouble their efforts to manage their spiralling healthcare plan costs. The quality of the claims reporting and loss prevention measures available varies significantly between the global insurance networks – both these factors are becoming key drivers in the choice of insurance providers at the local and global level.”

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