Healthcare benefit cost growth projected to rise to 10% in 2023

38% of employers do not know the cost of healthcare benefitsResearch has revealed that the growth in healthcare benefit costs rose from 8.2% in 2021 to 8.8% in 2022, with a projected rise to a global average of 10% in 2023, the highest level in nearly 15 years.

According to The 2023 Global medical trends survey of global medical insurers, conducted by global advisory, broking and solutions firm Willis Towers Watson, many regions are likely to see costs rise, including Latin America, where average increases are projected to climb from 18.2% to 18.9%, Asia Pacific (6.9% to 10.2%), and the Middle East and Africa (10.5% to 11.5%).

The report found that average increases in Europe are expected to rise to 8.6% next year from 8% in 2022, whereas in North America, costs were projected to drop from 9.4% in 2022 to 6.5% in 2023.

More than three-quarters (78%) of insurers anticipated higher or significantly higher increases over the next three years, while UK private medical insurance (PMI) costs were expected to rise by 8.8% in 2023

The research highlighted that the leading driver of medical costs continues to be overuse of care (74%) due to medical professionals recommending too many services or overprescribing, while 52% cited insured members’ poor health habits. Half (50%) thought that the underuse of preventive services was a significant cost driver, and that this increased year-on-year, partly due to a lack of medical care during the Covid-19 (Coronavirus) pandemic.

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Cancer, cardiovascular issues and musculoskeletal concerns were identified as the top three conditions by cost, identical to last year’s findings. Musculoskeletal conditions ranked top in terms of the incidence of claims this year, whereas it was only fifth in the list last year.

Kevin Newman, head of health and benefits Europe at WTW, said: “Worldwide inflation and a rise in healthcare use in the wake of the pandemic are delivering a one-two punch on medical costs around the globe. The bottom line is that these large increases are unsustainable. Employers and insurers will need to develop strategies and solutions to rein in costs to more manageable levels.”