More than half of global health insurers are expecting significant increases in healthcare costs over the next several years, according to a new report.
Analysts at advisory firm WTW surveyed 266 insurers across 66 countries and found that 58% are bracing for "higher or significantly higher" cost increases in the three upcoming years. The report found that global medical costs increased by 10.7% in 2023, a record high and up from a 7.4% increase in 2022.
The average cost trend insurers expect is 9.9% next year, which accounts for variations in rates between regions. For example, the estimated rate of cost increases decreased from 10.9% in 2023 to 9.3% in 2024, while it's projected to rise from 11.3% in 2023 to 12.1% in 2024 in the Middle East and Africa, according to the report.
"It's not only that the costs are increasing," Alan Silver, senior director and financial, analytics and actuarial intellectual capital leader at WTW, told Fierce Healthcare, "it's that there's uncertainty around how much over the next few years."
Insurers see multiple factors as playing a role in driving cost increases, according to the survey. For one, ongoing inflation around the world poses a massive challenge. The survey notes, though, that while inflation is expected to be a key factor into 2024, it did moderate over the course of the year.
In addition, COVID-19 is still making its presence felt even as the pandemic wanes. The spread of the virus led many patients to delay elective procedures and preventive surgeries, and those utilization levels have largely returned to normal or near-normal.
Those care delays, however, have also led to delayed diagnoses that can drive up costs, according to the survey.
More than half of the surveyed insurers (59%) said that overuse of care, caused by clinical overprescribing, is a key driver of medical cost. In addition, 49% said members' poor health behaviors are a major factor and 47% said a lack of preventive care.
Silver said that while the cost of prescription drugs is a larger problem in the United States, that is a trend that has impacts globally, too.
"It's, for lack of a better way to put a patient in a little bit of a perfect storm with the economy, post-pandemic, and innovation hitting the market all at the same time," he said.
About half of insurers surveyed (54%) said the main change they made for 2023 was to add well-being benefits. Forty-one percent said they added telehealth benefits.