Employer-sponsored medical insurance costs are expected to increase by 4.3% in 2020, according to a survey by Willis Towers Watson.
This represents a slight increase from 3.9% in 2019.
The poll of 296 insurers in 79 countries found average medical insurance costs increases in the five regions studied will range from 4.3% in Europe to 11.7% in Latin America. Globally, costs are predicted to rise by an average of 6.8%.
The study found that 40% of all respondents expect medical costs will continue to increase at a higher rate over the next three years.
Cecil Hemingway, managing director and global co-head of health and benefits at Willis Towers Watson, said cost increases continue to outpace inflation and remain unsustainable making affordability a challenge for employers and employees alike.
“Employers that take steps now to understand the factors
driving up costs and evaluate how they deliver healthcare benefits will be
better positioned to manage costs in the years ahead,” he added.
More than a quarter of insurers (27%) predicted that mental health conditions will be among the three most common conditions affecting costs within the next five years, while 26% predicted these conditions will be among the most expensive.
Currently, cancer (83%), cardiovascular diseases (55%) and conditions affecting musculoskeletal and connective tissue (46%) are the top three conditions by cost and are expected to remain so in the near future.
In the UK, an emerging area which will potentially have a material impact on costs and trend are advanced therapy medicinal products. This name is given to three new types of products: gene therapies, tissue engineered products and somatic cell therapies. According to the research, many employers are considering their plan design governing this emerging area.
When asked for the most significant cost-driving factors outside the control of employers and vendors, 70% cited the high cost of medical technology, followed by providers’ profit motives (47%).
Nearly three in four insurers (73%) ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behaviour. Two-thirds (66%) cited overuse of care due to employees seeking inappropriate care.