- Health care benefit costs for companies across North America rose 9.8% this year, driven in part by high prices for new technologies such as gene therapy and diagnostics using artificial intelligence, Willis Towers Watson found in a survey of insurers.
- Benefits costs have risen worldwide as medical staff prescribe excessive care or unnecessary prescriptions, WTW found in a survey of 266 insurers in 66 countries. Poor health habits and neglect of disease prevention also drive up the cost of health care benefits, WTW said, citing the survey results.
- “Employers face both higher cost increases as well as the potential for significant disruption, making budgeting and planning more difficult,” said Debby Moorman, head of health and benefits at North America of WTW, said in a statement. “Faced with this environment, inaction is not an option.”
WTW’s spotlight on rising health care costs was preceded by a report Wednesday that Cigna Group and Humana Inc. intends to finalize a merger by the end of the year. The stock-and-cash deal would create a managed care company that could rival CVS Health and UnitedHealth Group, the Wall Street Journal said, citing anonymous sources.
Health care benefit costs in North America rose 8% last year, extending a long-term trend, and will likely rise 9.4% next year, WTW said.
CFOs and their C-suite colleagues must assess their risk tolerance for higher costs, review their health plans to ensure the best value and find ways to balance those cost pressures along with the need to support employees, Moorman said.
“By understanding the factors that affect health care and drive costs for their populations, employers can effectively counter the ever-present threat of rising costs,” he said.
Globally, 58% of insurers expect higher or higher increases in medical costs over the next three years, according to WTW.
“While some cost increases are expected to moderate in 2024, they remain at very high levels,” Linda Pham, senior director for integrated and global solutions at WTW, said in a statement.
COVID-19 has damaged health care systems and driven up costs. The pandemic hit in waves starting in early 2020, causing massive changes in demand for acute medical and outpatient care, WTW said.
When COVID-19 subsides, health care systems face a spike in consultations and elective procedures, WTW said. High inflation in many countries in recent years has also fueled rising prices.
While such challenges are easing, “the severity of some without the diagnoses and care needed today is getting worse,” WTW said.
Musculoskeletal disorders, caused by inactivity and poor ergonomics in home offices, are the most common category of ailments cited by insurers worldwide, WTW said.
Mental health problems, including anxiety and depression, are among the fastest-growing categories of illnesses in both cost and incidence, according to WTW.
In America, mental health disorders are likely to remain among the top five fastest-growing diseases in both costs and claims, WTW said.