Executive summary and key findings
Rampant inflation and increased healthcare utilization coming out of the pandemic are contributing to the highest projected increase in global medical costs in nearly 15 years. The 2023 Global Medical Trends Survey reveals that after rising from 8.2% in 2021 to a higher than anticipated 8.8% in 2022, the healthcare benefit cost trend for 2023 is projected to remain at a stubbornly high global average of 10%.
Costs are expected to continue rising in most regions (Figure 1). In Latin America, the medical trend is projected to climb from 18.2% to 18.9%, in Asia Pacific from 6.9% to 10.2%, and in the Middle East and Africa from 10.5% to 11.5%.
Even Europe, which has traditionally seen much lower levels in the past, is not excluded from the record levels of trend — in 2023, the cost increase is expected to jump significantly from 5.6% to 8.6%.
The one region where a decrease in trend is expected is in North America, projected to drop from 9.4% in 2022 to 6.5% in 2023. While this would be welcome news, U.S. employers in particular are not necessarily seeing this impact yet and remain concerned on cost and volatility — despite the fact that inflation overall may be abating for the coming year.
| |
Gross | Net** | ||||
|---|---|---|---|---|---|---|
| 2021 | 2022 | 2023 (projected) | 2021 | 2022 | 2023 (projected) | |
| Global† | 8.2 | 8.8 | 10.0 | 5.0 | 3.1 | 6.5 |
| Latin America† | 15.1 | 18.2 | 18.9 | 6.3 | 7.1 | 10.5 |
| North America | 9.1 | 9.4 | 6.5 | 5.3 | 3.1 | 4.0 |
| Asia Pacific | 9.8 | 6.9 | 10.2 | 7.3 | 3.2 | 7.6 |
| Europe | 5.6 | 8.0 | 8.6 | 2.7 | 2.0 | 5.4 |
| Middle East and Africa | 12.4 | 10.5 | 11.5 | 10.5 | 5.7 | 7.2 |
Medical costs are expected to continue to accelerate beyond 2023. Over three-quarters of health insurers (78%) anticipate higher or significantly higher medical trend over the next three years. Eighty-four percent of insurers in Europe expect higher or significantly higher medical trend during this time period, as do 73% of insurers in Asia Pacific, 69% of insurers in Latin America and 60% of insurers in the Middle East and Africa.
The pandemic highlighted the health disparities among different employee groups, prompting employers to place a greater emphasis on diversity, equity and inclusion (DEI) in their healthcare benefit strategy. To raise insurers’ awareness of this issue, the complete report includes a special section on DEI and healthcare coverage gaps in areas related to DEI.
Respondents once again ranked musculoskeletal disorders as the top condition by incidence of claims. This finding likely reflects the ongoing impact of poor ergonomics in employees’ home working environment combined with reduced levels of physical activity during the pandemic.
Cancer, which is predicted to be the fifth leading condition in terms of incidence of claims in 2022, moves up to the second spot in 2023, which is not surprising and is reflective of the impact of Covid on delayed access to diagnosis and care.
Mental health conditions such as anxiety and depression continue to take a toll on employees. Insurers ranked mental and behavioral health disorders as the fourth leading condition by both incidence of claims and cost.
Exclusions persist for conditions in areas related to DEI, a key priority and board-level issue in many organizations. These exclusions range from fertility treatments and gender reaffirming surgery to midwives and HIV/AIDS treatments. Employers have an opportunity to work with their consultants and brokers to bridge these coverage gaps and help deliver more equitable health outcomes across different employee groups.
Insurers ranked contracted networks of providers (70%) as the top cost management method. Telehealth continues to gain ground as a means of managing medical costs, moving up from number three in last year’s survey to number two this year. A notable shift over prior year occurred in the area of preapprovals for scheduled inpatient services, which dropped from number two (67%) last year to number five (52%) this year.
The percentage of insurers most concerned about providers driving up costs by recommending too many services rose from 64% in 2021 to 75% in this year’s study. In addition, more insurers are concerned about the impact of insured members’ poor health habits on healthcare costs. Over half of insurers (52%) currently indicate that insured members’ poor health habits are among the top factors affecting medical costs per person, up from 35% in the prior year.
Consistent with previous surveys, the high cost of new medical technologies (62%) and the profit motives of providers (35%) continue to be the key factors affecting medical costs. But in this year’s survey, insurers also cite broader issues that influence these costs including the decline in the quality or funding of public health systems (27%) and geopolitical conflicts (19%). These findings provide a more comprehensive picture of the range of external factors that impact medical costs.
