Few Places to Hide from Rising Health Benefit Costs

Cost of employer-sponsored health benefits up 7.8 percent globally this year.

A new report from Willis Towers Watson, the New York-based health benefits consulting firm, said most regions of the world are experiencing increases in health benefit costs in the high single digits. The 2017 Willis Towers Watson Global Medical Trends Survey said the cost of employer-sponsored health benefits rose an average of 7.8 percent this year globally, up from a 7.3 percent increase last year and a 7.5 percent increase in 2015.
By region, the cost of employee health benefits this year rose:

  • 11.5 percent in Latin America
  • 9.8 percent in the Middle East/Africa
  • 8.6 percent in North America (7.5 percent in the U.S.)
  • 8.6 percent in Asia Pacific
  • 4.5 percent in Europe

The report is based on a survey of 213 health care insurance companies operating in 79 countries.
The respondents cited the price of new medical technologies as the leading external factor driving up health benefit costs per employee. Some 63 percent of the insurers ranked med tech first, followed by “profit motives of providers” (40 percent) and “limited/poor networks to effectively control costs” (25 percent). The top three employee/provider behaviors driving up health benefit costs per employee, according to the respondents, were:

  • Overuse of care due to medical practitioners recommending too many services (74 percent)
  • Overuse of care due to employees seeking inappropriate care (54 percent)
  • Employees’ poor health habits (38 percent)

Interestingly, tactics to address employees’ poor health habits fell to the bottom of the list of tools the surveyed insurers use to manage medical costs. Globally, only 39 percent of the respondents said they use wellness or well-being programs to managed employee health care costs. And, only 26 percent said they offer chronic condition or disease management programs. Topping the respondents’ list of tactics to control costs were the using narrow provider networks (66 percent) and requiring pre-authorization of scheduled inpatient services (65 percent).
“There is still an opportunity for insurers to work more closely with employers to better understand employee population health risks,” the report said.