Global healthcare benefit costs are set to increase by more than 8% globally, according to research by Willis Towers Watson.
The 2021 Global Medical Trends Survey, which surveyed 287 medical insurers operating in 76 countries, found that the most impacted territories are Latin America with a 14% increase and Middle East and Africa with a 10% increase.
The cost of private medical insurance (PMI) in the UK continues to increase year on year, with an increase to 6% in 2020 and a predicted increase of 7% in 2021. The study also found that this will range from a 5% increase in Europe to a 13% increase in America.
Contributing factors for the increase in medical costs include a maturing insured demographic and an ageing workforce. The impact of high-cost treatments, such as new generation cancer drug therapies and wider availability of more complex medical treatments are also cited as reasons for this predicted increase.
Furthermore, two-fifths (41%) of medical insurers expect mental health conditions to be among the three most common conditions that will affect medical costs in the next 18 months, while a further 39% expect mental health to be among the most expensive treatments.
Other conditions that are predicted to have an impact on medical costs worldwide are cancer (79%), cardiovascular diseases (56%) and musculoskeletal and connective tissue issues (41%). Additionally, 52% of respondents cited medical technology as a significant reason for an increase to medical costs, followed by profit motives (36%) and epidemics or global pandemics (34%).
Kevin Newman, managing director of Willis Towers Watson’s UK health and benefits, said: “The pandemic undoubtedly had a major impact on medical trend this year as it sparked a sharp decline in non-urgent surgeries and elective care.
“While most countries experienced a decrease in trend this year, that is expected to be short-lived. In fact, we expect to see significant volatility in 2021 results, which are dependent on the impact of Coronavirus and whether or not a vaccine becomes available early in the year, who pays for it and the extent of its availability. In addition, there is uncertainty about how Coronavirus testing and treatment costs for 2021 will continue to be split between government, insurers and employers.
“Further uncertainty around medical trend lies ahead as we start to see the true impact of delayed treatment in 2020 and the long-term effects on those who contracted Coronavirus. Nevertheless, there is a silver lining as Coronavirus has greatly accelerated the adoption and use of telehealth, which could help to offset those potential higher costs and provide a more efficient way for insureds to access and use healthcare in the future. However, it may also boost utilisation due to ease of access.”