Medical insurance inflation is expected to increase at an average of 8% in 2022 but rise faster over the following three years as the impact of the Covid pandemic continues to be felt.
The figure comes from a survey of 209 private medical insurers representing 61 countries by consultant Willis Towers Watson (WTW) and illustrates a wide range of variation across the globe.
While Europe is expected to see a below average increase next year of about 6.7%, the UK is predicted to be above this at around the global 8% average.
However, this will be a drop from the 11% witnessed this year which was one of the highest in the world.
North America, along with Europe, is predicted to see a drop in inflation next year with price growth estimated at 8.6%.
However, Asia Pacific (7.6%), the Middle East and Africa (10.6%) and most significantly Latin America (14.2%) are likely to see inflation rates climb faster than this year.
And the pattern is not likely to improve as medical insurers expect healthcare cost trends to accelerate beyond 2022 around the world, with more than three-quarters projecting higher or significantly higher costs over the next three years.
Eighty-six percent of insurers in Europe expect higher or significantly higher medical trend over this time period as do 82% of insurers in the Middle East and Africa, 74% of insurers in Latin America and 64% in Asia Pacific.
Remote health and cost containment
Unsurprisingly the pandemic accelerated telehealth services, with more than half of global insurers offering telehealth across all plans, and 37% of insurers saying it was the biggest change to their medical portfolios in 2021.
Virtual healthcare also served as a driver for cost reductions but was not as efficient as using networks or pre-approval – 75% of respondents said using contracted networks of providers for all treatments was the most effective method for managing medical costs.
Preapproval for scheduled inpatient services (67%) was the second most efficient cost management tool with telehealth (63%) third – up from fifth last year.
Willis Towers Watson said this suggested more insurers recognised the potential for improved cost management through remote diagnosis and treatment of patients.
The leading driver of medical costs continues to be overuse of care (64%) due to medical professionals recommending too many services or overprescribing.
Excess of care by insured members (59%) was the second leading driver while the underuse of preventative services (38%) was also a significant cost-driver and increased year-on-year due to in part, the avoidance of medical care during the pandemic.
MSK tops claims causes
Musculoskeletal (MSK) disorders soared to the top reason for claims after being just fifth last year. WTW suggested this could potentially be attributable to poor ergonomics in employees’ work-from-home environment.
In contrast cancer, which in prior surveys held the top spot, dropped to number five by incidence likely due to deferred treatments during the pandemic; however, cancer continued to be a top condition affecting medical costs, followed by cardiovascular and musculoskeletal disorders.
And the report also found insurers expect mental and behavioural disorders to be the fastest-growing condition by incidence in the next 18 months, followed by cancer and musculoskeletal disorders.
“Covid-19 has caused volatility in the trend numbers and in the leading causes of claims, as the sedentary lifestyle that often accompanies working from home has increased the risk of musculoskeletal injuries. In addition, as most employers can attest, mental health claims are also on the rise,” WTW said.
Exclusions and benefit philosophies
The consultant also urged employers and advisers to call out insurers for gaps in coverage for conditions that are prevalent in the covered population and for which treatments exist.
It noted that over half of group policies, regardless of size, have exclusions for HIV/AIDS (54% to 56%) as well as alcoholism and drug use (52% to 53%).
“Employers should continue to try to remove these exclusions and leverage their consultants or brokers to help negotiate inclusion coverages that are part of global benefit philosophies and of critical value to many employees,” it said.
“Covid-19 has produced the biggest impact to global medical trend variation the industry has seen, and we expect the repercussion and volatility from it to extend into 2022 and beyond,” said Eric McMurray, global head of health and benefits at Willis Towers Watson.
“Countries and employers are feeling the impact differently. Some have experienced the recovery’s demand for regular medical services in 2021, while others will see it next year or after.
“The pandemic, combined with the changing face of work, has had a significant effect on medical trends, delivery of services and the future drivers of medical claims.”