LONDON, November 17, 2021 — Employer-sponsored health care benefit cost trends are expected to increase 8.1% on average globally in 2022, a similar level to this year, according to a survey of medical insurers. Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company conducted the 2022 Global Medical Trends Survey. Notably, the survey disclosed sizeable variation in cost trend increases by region. With COVID-19 surging in different countries at various times in 2020 and 2021, survey results show the pandemic’s asymmetrical arc created considerable volatility in health care use and costs around the world.
When comparing specific geographical regions, insurers expect cost trends to be as high as 14.2% in Latin America next year, while in the U.S. costs are projected to increase by 7.6%. Survey respondents anticipate price increases of 10.6% in the Middle East and Africa, 7.6% in Asia Pacific and 6.7% across Europe. Looking ahead, medical insurers expect health care cost trends to accelerate beyond 2022, with over three-quarters projecting higher or significantly higher costs over the next three years.
In the UK, private medical insurance costs are set to continue to increase above the European average for the second year in a row. 2022 will see UK costs increase just over 8% on average, down from a high of over 11% this year but significantly above the -3.8% cost reduction seen in 2020.
Contributing factors in the UK include the delay in routine and elective NHS medical treatments for a large part of 2020 and 2021 leading to record waiting lists, prompting greater use of private medical healthcare services. Additionally, delayed diagnosis and treatment, the effects of long COVID and increasing mental health and musculoskeletal claims could all push the cost of claims up. However, more regionally administered treatments, due to hybrid working, and the increased use of telehealth services and digital pathways are likely to diffuse some of the upward pressure on healthcare costs.
“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, 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.”
According to the survey, medical insurers acknowledge the pandemic has really helped accelerate telehealth services, underscored by the potential for cost reductions that virtual health care creates. Over half of global insurers now offer telehealth across all plans, and nearly four in ten insurers (37%) identified the addition of telehealth services as the biggest change to their medical portfolios in 2021.
“Telehealth’s momentum will be sustained post-pandemic. In fact, the role of telehealth will continue to evolve not only as a navigation tool to speed access to the right care but also as a means to close gaps in access to care,” said Francis Coleman, Managing Director, Willis Towers Watson.
| 2020 | 2021 | 2022 projected |
|
|---|---|---|---|
| Global+ | 4.8% | 8.1% | 8.1% |
| North America | 6.6% | 9.7% | 8.6% |
| Latin America+ | 13.1% | 13.2% | 14.2% |
| Asia Pacific | 5.4% | 7.0% | 7.6% |
| Europe | 2.3% | 7.1% | 6.7% |
| United Kingdom | -3.8% | 11.2% | 8.2% |
| Middle East/Africa | 6.1% | 10.2% | 10.6% |
*Projected
+Global and regional trend rates are weighted based on GDP per capita. Due to the hyperinflationary nature of the Venezuelan economy, Venezuela has been excluded from Latin America regional and global totals.
Seventy-five percent of survey respondents said using contracted networks of providers for all treatments is the most effective method for managing medical costs; preapproval for scheduled inpatient services (67%) is the second most efficient cost management tool. Telehealth (63%) moved up from the fifth most effective tool in last year’s survey to number three this year, suggesting more insurers recognize 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%) is the second leading driver. The underuse of preventative services (38%) is also a significant cost-driver and increased year-over-year due to in part, the avoidance of medical care during the pandemic.
Insurers named cancer, cardiovascular and musculoskeletal as the top three conditions by cost, identical to last year’s findings. Interestingly, respondents ranked musculoskeletal disorders as the top condition by incidence of claims compared to fifth in last year’s survey.
“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,” said Coleman.
Willis Towers Watson conducted its 2022 Global Medical Trends Survey between July and September 2021. 209 leading insurers representing 61 countries participated in the survey.
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.
