High costs are likely to remain with nearly three in five insurers expecting larger increases over the next three years.

Global medical care benefit cost increases, as reported by health insurers, show little to no decline in 2024, one year after hitting a historic double-digit inflation, according to a survey by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company. Adding further emphasis to the continued risk of high medical costs nearly three-fifths of insurers (58%) anticipate higher or significantly higher increases over the subsequent three years.

The WTW Global Medical Trends Survey found the cost of medical care globally jumped from 7.4% in 2022 to a record high of 10.7% in 2023. The insurer-reported cost trend for 2024 is projected to be an average of 9.9%. This is influenced by variations in regions around the world, with some showing little to no change from 2023 to 2024, and others registering slight decreases or increases. The sharpest drop in the rate increase is projected in Europe – from 10.9% in 2023 to 9.3% in 2024, the lowest increase projected in any region. The one region with an expected increase in medical trend is the Middle East/Africa, where increases are projected to rise from 11.3% in 2023 to 12.1% in 2024.

However, in the UK, private medical insurance costs are expected to increase by 11.2% in 2024, higher than the global average, and nearly two percentage points higher than the European average. This is driven by more employees accessing private medical provision for routine medical needs, such as GP consultations and virtual care services, leading to increased use of private healthcare and higher overall claims in outpatient treatment and diagnosis.

Several factors are contributing to variations noted above. The spread of COVID in waves during the pandemic produced wide swings in the utilization of acute medical and outpatient care that have largely leveled out or waned. The spike in elective procedures, consultations and other medical care resulting from delayed or postponed care due to the pandemic  has eased, however, the severity of some missed diagnoses and care needed now has worsened. In addition, global inflation, which was a significant factor in driving up healthcare costs, has moderated in 2023 is expected to continue to fall going into 2024.

“While some cost increases are projected to ease in 2024, they remain at significantly high levels,” said Linda Pham, senior director, Integrated & Global Solutions, WTW. “The high cost of new medical technologies is a key reason for the persistently high trend. Furthermore, in some regions, ongoing geopolitical conflicts and resulting displaced populations have negatively affected medical costs due to an increased need for care and reduced availability of providers.”

Global medical trends: Healthcare benefit cost increases, 2022 – 2024

The leading driver of medical costs, according to insurers, continues to be overuse of care (59%) due to medical professionals recommending too many services or overprescribing. Nearly half of insurers (49%) also indicate that insured members’ poor health habits are among the top factors. The underuse or lack of preventive services (47%) is also a significant cost driver.

The addition of wellbeing services (54%) was the biggest change insurers made to their medical portfolio in 2023. The survey also found telehealth offerings continue to be a priority for insurers.  Four in ten respondents (41%) added telehealth services in 2023, making this second most prevalent change insurers made to their offerings.

“Faced with the prospect of higher cost increases over the long-term, employers should focus their efforts on how to make their healthcare benefit programs more cost effective.  This can range from conducting a review to determine if coverage is the right fit for their organisation and effective treatment specific pathways are in place, to formulating a global wellbeing strategy and ensuring wellbeing benefits are accessible to all employees and their families.  By understanding the factors that affect healthcare, insurers and employers can develop strategies to combat the ever-present threat of rising costs,” said Kevin Newman, Head of Health and Benefits Europe, WTW.