- Health care benefit costs for companies across North America surged 9.8% this year, fueled in part by the high price of new technologies such as gene therapy and diagnosis using artificial intelligence, Willis Towers Watson found in a survey of insurers.
- Benefits costs rose worldwide as medical staff prescribed excessive care or unneeded prescriptions, WTW found in a survey of 266 insurers in 66 countries. Poor health habits and neglect of prevention against illness also pushed up health care benefit costs, WTW said, citing survey results.
- “Employers are facing both higher cost increases as well as the potential for significant volatility, making it even more difficult to budget and plan,” Debby Moorman, head of North America health and benefits at WTW, said in a statement. “Faced with this environment, inaction is not an option.”
The WTW spotlight on spiraling health care costs preceded a report Wednesday that Cigna Group and Humana Inc. aim to finalize a merger by year end. The stock-and-cash deal would create a managed care company able to rival CVS Health and UnitedHealth Group, the Wall Street Journal said, quoting unidentified sources.
Health care benefit costs in North America rose 8% last year, extending a long-term trend, and will probably increase 9.4% next year, WTW said.
CFOs and their C-suite colleagues should assess their risk tolerance for higher costs, review their health plans to ensure optimal value and find ways to balance cost pressures with the need to support employees, Moorman said.
“By understanding the factors that affect health care and drive costs in their populations, employers can effectively combat the ever-present threat of rising costs,” she said.
Worldwide, 58% of insurers expect higher or significantly higher increases in medical costs during the next three years, according to WTW.
“While some cost increases are projected to ease in 2024, they remain at significantly high levels,” Linda Pham, senior director for integrated and global solutions at WTW, said in a statement.
COVID-19 has strained health care systems and pushed up costs. The pandemic hit in waves beginning in early 2020, causing wide swings in demand for acute medical and outpatient care, WTW said.
When COVID-19 subsided, the health care systems faced a spike in consultations and elective procedures, WTW said. High inflation in many countries in recent years has also fueled the rise in prices.
While such challenges have eased, “the severity of some missed diagnoses and care needed now has worsened,” WTW said.
Musculoskeletal disorders, caused by inactivity and poor ergonomics in home offices, is the most common category of ailments cited by insurers worldwide, WTW said.
Mental health problems, including anxiety and depression, is among the fastest growing category of illnesses by both cost and incidence, according to WTW.
In the Americas, mental health disorders will likely remain among the top five fastest growing ailments by both cost and claims, WTW said.