Global Medical Trends survey 2017 predicts continued rise in cost of medical care

The cost of medical care will continue to rise, according to Willis Towers Watson’s annual Global Medical Trends Survey for 2017 ^[1], published in June 2017.

The survey points out that while the trend has slowed in some countries, it is still mostly above inflation. It can be attributed to the overall cost of hospital and inpatient services, basic medical and outpatient services, provider and employee behavior, new medical technology, and rising provider profits.

The survey also showed that employers are increasingly turning to providing programs that encourage employees to be responsible for their own health and wellness by adopting preventive care strategies and well-being initiatives.

The survey responses highlighted the following points:

• Average global medical trend will rise to 7.8% weighted by DGP per capita in 2017, up from 7.3% in 2016 and 7.5% in 2015.
• Latin America leads all regions on trend, thanks to high inflation, while Europe continues to have the lowest trend by having socialized medicine.
• More than half of health insurers globally expect the trend to be higher or significantly higher over the next three years with these exceptions:
  • The Middle East and Africa has 53% of insurers expecting the trend to remain at the same level without an increase, or that it may even decline by 5%
• The U.S. will trail the global trend, but this is uncertain after the 2016 elections.
• Drivers of the higher trend include:
  • Hospital/inpatient services and basic medical/outpatient services including pharmacy
  • Providers overprescribing too many services and employees seeking inappropriate care
  • New medical technology and higher provider profits
• Cardiovascular disease, cancer, and respiratory diseases will lead the list of noncommunicable diseases that continue to increase.
• Higher-level claim coding, which improves the likelihood that employers receive information they can use in strategic planning, is headed in the right direction, especially for large employers.
  • The adoption of ICD-10 continues to improve slowly
  • Room for improvement in data availability, especially in Europe.
• Mental health inclusion has risen to 61% from 50% in 2014, while many insurers continue to exclude treatment for alcoholism and drug use (72%) and HIV/AIDS (43%)

The survey concluded that insurance companies can only control “what is within their reach,” by leveraging adequate metrics and innovative approaches to combat the external (economics, technology, health conditions) and intrinsic (plan design, insured member behavior, service and control of delivery) forces that influence the industry.

It also says that “there are still significant opportunities for clients to leverage in balancing medical trend and improving employee health.” Access to data is key to successfully leveraging the new ICD-10 coding system, and providing data to clients will help them make the most informed decisions about their health benefits.

The survey also points out that employers need to take initiative beyond what the insurers can achieve, including understanding their population’s health, putting employees at the center of their health care strategies, and looking at the cost of health care holistically.

The survey was conducted in 2016 and included respondents from 241 leading medical insurers operating in 79 countries.