Global cost of healthcare continues to rise

global healthcare costs rising

The cost of providing medical benefits to employees looks set to rise for the third year in a row.

Independent of the new healthcare ruling in the U.S. Supreme Court healthcare costs are rising. This trend is not unique to the United States. According to a new study on medical costs by Towers Watson, healthcare costs are rising in “double-digits” around the world.

The survey from professional services provider, Towers Watson, focussed on the cost to employers of providing health benefits to employees. While it shows traditional cost management systems still dominate in most companies more employers are looking towards alternatives. Wellness programmes and health promotion strategies are gaining ground with employers looking to promote employee health and well-being.

The survey looked at 237 leading medical insurers in 48 countries. It found the cost of employee medical benefits is expected to increase 9.6% in 2012. This is slightly lower than the 9.8% increase in 2011 and the 10.2% increase experienced in 2010. Costs are still expected to rise in double digit levels in four out of five global regions. Europe is the only area predicted to experience a single digit increase.

As the cost increases remain relatively constant so have the causes. The three factors which repeat most often are the same as those in 2011. New medical technology causing overuse of care (cited by 52% of survey respondents), practitioners recommending too many services (50%) and providers’ profit motives (31%).

Employers fight to control costs

Although the most popular methods of medical cost management remain contracted provider networks and pre-approval for inpatient services (both cited by 57% of respondents), some less traditional methods are receiving attention, too. More than two in five (42%) respondents reported using chronic condition or disease management tools, and more than one in four (29%) are using wellness programs.

The most common prevention feature remains the second medical opinion, which is offered by nearly 80% of respondents (both in-house and through a partner). Insurers are also increasing wellness services, such as health risk assessments and chronic condition/disease management programs, offering these either in-house or through the use of partners.

“Employers are moving slowly but steadily toward an increased focus on wellness,” said Nicole Serfontein, senior international consultant at Towers Watson. “This slow progression for multinational companies is not surprising given challenges such as finding vendors that can provide wellness services on a global or regional basis, poor infrastructure and other inefficiencies. But these obstacles can be overcome with a commitment to organizational health promotion — a strategy that will not only enable employers to manage their costs, but also drive employee health, engagement and productivity over the long run.”