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Global health care costs expected to increase 10% next year


Largest increase in 15 years driven by inflation and increased utilization, but North America expected to do better than most regions

A survey by WTW of global medical insurers shows that 78% of respondents are anticipating higher or significantly higher cost increases in the next three years. The 2023 Global Medical Trends Survey reveals that benefit costs rose from 8.2% in 2021 to 8.8% this year, with that rate expected to hit 10% next year. North America is the one region where benefit costs are projected to drop, with rates decreasing from 9.4% this year to 6.5% in 2023.

“Worldwide general inflation, overall instability in the global economy, increased health care utilization in the wake of the pandemic and a dynamic labor market require employers and insurer to think and act differently to address these issues in a meaningful way,” said Eric McMurray, global head of Health & Benefits, WTW, in a statement. “Old solutions will not work. Cost shifting is not an option. There’s a critical need for innovation, strategy and new solutions to have any substantive impact. Those that don’t lead will fall behind in their ability to manage cost and retain key talent.”

The leading driver of medical costs, according to insurers, continues to be overuse of care (74%) due to medical professionals recommending too many services or overprescribing. Over half of insurers (52%) also indicate that insured members’ poor health habits are among the top factors. The underuse of preventive services (50%) is also a significant cost driver and increased year over year due to, in part, the avoidance of medical care during the pandemic.

Insurers identified cancer, cardiovascular, and musculoskeletal as the top three conditions by cost, identical to last year’s findings. Interestingly, respondents ranked musculoskeletal as the top condition by incidence of claims this year compared with ranking it fifth last year.

The survey also revealed telehealth continues to gain traction in health delivery and cost management, moving up from number three in last year’s survey to number two this year. Insurers again ranked contracted networks of providers (70%) as the most effective method for managing medical costs.

“Health care affordability remains top of mind for insurers, employers and employees,” said Francis Coleman, managing director, Integrated & Global Solutions, WTW, in a statement. “As we move into next year, we see a challenging year for employers in trying to balance the convergence of rising medical trend, salary pressures and the need to continue to make progress on DEI [diversity, equity and inclusion] initiatives globally, all while dealing with potential recessionary markets.”

WTW surveyed 257 leading insurers representing 55 countries. The U.S. medical trend data are drawn from other WTW research.

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