Global health care expenses are expected to increase by 9.2% next year, up from 7.4% this year which is the highest rate since 2015. The United States and Canada may be spared the steepest increases – at least for now.
"North America was the only region without an increased trend rate, holding steady at 6.6% due to the delayed impacts of inflation on U.S. medical trends," according to the 2023 Global Medical Trends Report from Aon. "North American trend rates will continue to experience upward pressure over the next couple of years, further accelerating the cost and affordability challenges already present in that region. Although the 2023 rates may feel comparatively low, there are still significant pressures within the North American health care system that are catalyzing higher health care costs."
The top medical conditions driving global cost increases are cardiovascular disease, cancer and tumor growth, and high blood pressure and hypertension.
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"At the local level, companies looking to mitigate the increased costs are using a familiar set of strategies," the report says. "Wellbeing initiatives again are the leading mitigation strategy. Cost-containment measures, such as raising deductibles and copays, are expected to play an important role during 2023, as are plan design changes, access and delivery restrictions, and the use of flexible benefit plans to cap overall benefit costs.".
The report cites three specific strategies that employers are using to mitigate cost increases:
- Long-term health care financing. Leading employers are leveraging broker and vendor consolidation as one way to do it and adopting is the use of captive insurance vehicles. Captives provide far greater control over pricing and facilitate the linkage between wellbeing initiatives and health care spend. Any underwriting profits on the portfolio also can be reinvested in further wellness and health care initiatives.
- Health care analytics. For any health care strategy to work, it needs to be built on robust data inputs and an understanding of the underlying claims and health cost drivers. Many leading employers are looking toward using a "global health care dashboard" to access quarterly reports on claims and diagnostic data for their major health care plans. This information then can be used to set and measure tailored wellbeing initiatives and also react to unexpected claims situations.
- Broad wellbeing strategy. Rising health care costs are just one manifestation of "ill-being" within an employee population. Leading employers build resilient workforces by combining health care data with other key data sources to identify a broad set of wellbeing focus areas and then implement programs and strategies to tackle them.
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
