Health care costs are rising throughout the world, but more employers are mitigating those costs by offering preventive care and wellness programs, according to the 2017 Willis Towers Watson Global Medical Trends Survey.
The cost of health care benefits is projected to rise 7.8 percent this year, an increase from 7.3 percent in 2016, according to the survey of 218 medical insurers operating in 79 countries. Moreover, a majority of insurers in all regions except the Middle East and Africa expect higher or significantly higher medical trend costs over the next three years.
In the Middle East and Africa, more than half (53 percent) of insurers expect the rate of cost increases to remain about the same for future years.
When asked about the most significant cost-driving factors outside the control of employers and vendors, three in four insurers (74 percent) rank overuse of care due to medical practitioners recommending too many services as the most significant factor.
Other factors cited by the respondents include overuse of care due to employees seeking inappropriate care (54 percent), the high cost of medical technology (63 percent) and providers’ profit motives (40 percent).
Francis Coleman, Willis Towers Watson’s head of health and benefits, global services and solutions, said in an interview Wednesday that one of the main cost drivers in the U.S. and Canada is the rising cost of pharmaceutical medications, while the main driver in countries with nationalized health care are the expenses being incurred to pay for the construction of private hospitals with new medical technologies to supplement government-run programs.
“In the last 10 to 15 years, there’s been a huge demand for private health care outside of the U.S., with the development of alternative facilities and private insurers,” Coleman says.
“Employers are offering supplemental private plans because of the wait times for treatment in the government programs, particularly for certain surgeries. Employees are choosing to go to private facilities for much of their care because of speed of access.”
In the U.S., many physicians still over-test because they fear they might get sued if they don’t do enough, he says. However, employees that have high-deductible health care plans are starting to question the necessity of certain tests in all cases, such as an MRI, after learning that they might have to pay up to $2,000 out of their own pockets.
“People are starting to ask, 'Do I really need an MRI?'” Coleman says.
To mitigate rising health care costs, more than a third (39 percent) of employers throughout the world are now offering wellness or well-being programs, according to the survey. In the U.S., three-quarters now offer these programs, while just about half of insurers in Europe offer them. These offerings are projected to grow — some significantly — in the next year.
“We’re definitely seeing an increase in wellness and well-being programs outside of North America, but different regions need different things,” Coleman says. “Parts of Africa don’t need biometric screening – people just need a basic education of hygiene, access to vaccinations and more preventative care.”
In the U.S., more employers are now testing outcomes-based wellness programs with biometric screening and offering employees financial incentives if they fit within a certain range, he says. For those with pre-existing conditions that cause them to fall outside those ranges, more employers are tailoring outcomes for those employees so they can be eligible for incentives.
For all of the survey respondents, more than half offer personal health risk assessments (65 percent, with an additional 16 percent reporting they plan to offer in the next year); second medical opinions (71 percent, with an additional 11 percent planning it); biometric screenings (54 percent, expected to grow to 58 percent); and lifestyle and health education (48 percent, expected to grow to over 60 percent next year).
Another encouraging survey result, Coleman says: More insurers throughout the world are starting to adopt the ICD-10 coding system for health conditions in claims.
“This creates more commonality in reporting, so employers can start to compare and benchmark within their country and region,” he says.
Other findings from the survey include:
Insurers worldwide report cancer (75 percent), cardiovascular disease (67 percent) and respiratory illness (40 percent) as the top three diseases. Respondents don’t expect the situation to change in the next five years.
Two-thirds (66 percent) use contracted networks, while 65 percent require pre-approval for scheduled inpatient services to help manage costs. Nearly 6 in 10 (59 percent) place limits on certain medical services.
With concerns about employee stress continuing to rise, 61 percent of insurers globally now include treatment for mental health and stress in their standard medical insurance programs.