Medical costs continue to spiral for insurance industry
Medical insurers are once more seeing costs rise almost across the board, and while companies are planning a range of wellness and health initiatives for employees, these are unlikely to contain the rise in the near term. The US in particular is set to see a spike in costs in 2017, while Europe is forecasted to face an increase of around 4% in medical costs.
The Global Medical Trends Survey Report (GMTSR), an annual study by Willis Towers Watson (WTW), considers annual medical cost trends for employers, as well as moves employers are leveraging to boost efficiency. The survey involved 231 insurers across 79 countries that provided insights on medical costs. Medical costs have been in the spotlight in recent years, particularly in the US, and with the new administration of President Trump seeking to repeal state insurance plan Obamacare, many low-paid members of the American workforce could soon be facing more expensive health costs.
The report meanwhile states the case that, “a healthier workforce is a more productive workforce”, noting that companies are already exploring wellness programmes, in a bid to promote employees to managing their own health and negate the need for costly healthcare provision. Unfortunately the study also suggests that one of the root structural causes of unhealthy lifestyles remains unaddressed — as many of the self-same companies perpetuate and reinforce such modes of living in their own sales and marketing initiatives, with large profit incentives offered for such successful market exploitation.
Change Ahead
The majority of insurers polled projected health costs for medical insurers to rise, and globally 46% of respondents say that they expect their overall book of business to change over the next three years compared to current rates. 6% of those surveyed stated the situation will be significantly higher, while around 42% said conditions will remain broadly consistent.
Change in medical expenditure is expected almost across the board meanwhile, with the biggest movement noted in the Americas, with 47% of those asked expecting high variations, and 10% significantly higher, while among insurers polled in the Asia-Pacific, 48% projected higher and 5% significantly higher. Only respondents based in the Middle East and Africa recorded a majority of answers believing there would be little disruption, with 53% stating they expected a continuation of the status-quo.
The data also suggests insurers foresee various service categories increasing over the coming five years, with as many as 60% of respondents in the Americas, Asia-Pacific and the Middle East and Africa, predicting that Basic Medical and Out-Patient expenses will see rises, while Hospital and In-Patient costs are expected to increase by more than 90% of Asia-Pacific respondents. Along with respondents based in the Asia-Pacific region, 19% of whom thought high levels of significant cost increases were due, those in the Americas were particularly concerned about rises in pharmacy costs, with 18% projecting significant increases and 53% projecting increases.
In each respect conversely, European respondents meanwhile expecting the lowest level of rise in each segment as state-sponsored socialised health systems continue to drive demand and cost down within private markets. North American costs are set to rise significantly above inflation as, among other reasons, the inefficient and historically poorly designed medical system is teeters on the brink of uncertainty, as a lack of single-payer European model sees medical expenses increasingly impacting employees.
Top medical concerns
In terms of the biggest three medical conditions in the coming five years, Cancer ranks top, at 75% of respondents, followed by Cardiovascular, at 67%. Cancer is of particular concern in the Asia Pacific region, while Cardiovascular is of particular concern in the Americas as a result of low-quality diets and increasingly sedentary lifestyles.
In the Middle East/Africa, as increasing fossil-fuelled industrialisation amongst developing nations leads to increasing levels of air pollution, Respiratory ranks considerably higher than in other regions, cited by almost 70% of respondents, while Musculoskeletal/Back is ranked in the top three by 9% of respondents. In Europe concern around Musculoskeletal/Back was cited by 46% of respondents as their largely tertiary-based economies lead to rising levels of repetitive strain.
Researchers further probed respondents on which were the three most significant external factors driving medical costs per person. Ranking highest at 63%, ‘higher costs due to new medical technologies’ was followed by ‘profit motives of providers’ at 40%. Other areas said to be creating cost impacts included ‘limited or poor networks to effectively control costs’, ‘changes in workforce demographics’ and ‘current or recent economic environment’, polling at 25%, 24% and 23% respectively.
The lowest responses were ‘higher per capita income’, ‘insufficient information on external factors’, and ‘poor information on provider quality’, at 2%, 6% and 14% respectively – meaning even a higher income, educated consumer in a system of competition is perceived as being likely to be hit hard by ever-increasing costs.
