UK health care benefit costs will increase by 6% in 2019
Employer provided health care benefit costs are expected to increase by as much as 8% globally in 2019, with insurers largely blaming over-prescription for soaring medical expenses. The rise will be a lower 6.3% in the UK, thanks in part to the influence of the NHS.
There has long been growing gap between nations which allow for universal healthcare and those which fiercely maintain the efficiency of corporate interests in the matter. While proponents of the latter have tirelessly maintained that the dynamism of free market competition can improve service delivery, reduce bureaucracy and drive down costs, the opposite has consistently been shown to be the case.
Last year, a report from Willis Towers Watson revealed that North America, South America, Asia-Pacific and the Middle East and Africa could all expect to see exponential rises in Basic Medical and Out-Patient expenses, while Hospital and In-Patient costs were expected to increase by more than 90% of Asia-Pacific respondents. At the same time, conversely, European respondents expected the lowest level of rise in each segment as state-sponsored socialised health systems continue to drive demand and cost down within private markets.
The annual review of health care benefit costs is carried out by Willis Towers Watson to consider medical cost trends for employers, as well as moves employers are leveraging to boost efficiency. Conducted between July and September 2018, the latest incarnation of the study reflects responses from 307 leading medical insurers operating in 77 countries, and following up on last year’s findings, the latest edition of the Global Medical Trends Survey Report has found that Europe and the UK will maintain the lowest levels of growth in expense, in comparison to more market-driven systems.
Medical insurers globally are projecting health care benefits costs to rise 7.6% in 2019, a slight increase over 7.1% this year. The largest increases are expected in the Middle East and Africa, where costs are projected to jump 12.4%. The rate at which cost are rising in the US are expected to decline slightly, from 8.7% this year to 7.9% next year, however the continued absence of a so-called ‘single payer’ system of health care means this figure still hangs above a global average brought down significantly by Europe’s performance.
Cecil Hemingway, managing director and Global co-head Health and Benefits, Willis Towers Watson, said, “Rising health care costs continue to be a major issue for insurers and employers globally as increases continue to outstrip inflation by a two-to-one margin and are unsustainable over the long term. “While some employers are cautiously optimistic that future cost increases will hold steady or increase only slightly, concerns linger over how medical treatment is being provided, the reliance on pharmacy services, and the cost implications of innovative future treatments, all of which can fuel sharp cost increases down the road.”
Europe saw the smallest increase (5%) in 2018, with the same rate in 2019, as the continent hosts a significant number of nations which still provide universal coverage. Britain is an outlier of this figure, seeing costs rise at 7% in 2018. While this will fall to 6% in 2019, according to Willis Towers Watson estimates, the pressures put on the country by Brexit are likely to see it remain above the European average. A No Deal Brexit could see charter planes used to fly in drugs for the NHS and medicines given priority access through gridlocked ports, as Theresa May's cabinet is reportedly drawing up plans to ration space on ferries carrying vital supplies to Britain.
Ageing population
The survey also highlighted another disparity, as the lower pharmacy costs European health care providers face open up options of doing more for other types of care, exposing insurers to different costs. 50% of respondents predict that costs for behavioural and mental health care will become an increasingly significant part of medical expenses over the next five years. At the same time, ageing populations across Europe mean 52% expect hospital and inpatient care costs will increase heavily. This is in contrast to other regions, with eight in ten insurers (80%) in the Americas and 66% of Middle East and Africa insurers expecting the bulk of medical expense increases to come from pharmacy costs over the next five years.
Relatedly, Insurers report musculoskeletal (66%), cardiovascular (54%), and cancer (43%) as the top three conditions that cause the highest number of claims in Europe. With the ready access to health care having led the continent’s population to survive long enough to often encounter one of these traditionally later-in-life afflictions, respondents don’t expect the situation to change in the next five years.
Francis Coleman, Managing Director, Health and Benefits, Global Services & Solutions, Willis Towers Watson, commented, “We know from our research and consulting that insurers and employers are working to develop programmes that aim to stem rising medical costs and improve employee health. While traditional cost management programmes remain popular, we expect insurers and employers will look closely at telemedicine, second medical opinion services and other innovative design programmes that can help to control costs and meet the needs of their employees.”
