Dive Brief:
- The cost of medical care benefits in the U.S. is projected to increase about 8.9% in 2024, compared to 8.2% in 2023, according to WTW’s Global Medical Trends Survey. Globally, by contrast, the cost of medical care benefits will ease slightly in 2024 — after increasing more than 10% in 2023 — before rising again over the next three years.
- The use of new medical technologies “remains the leading external factor contributing to increased medical costs,” according to the report. Six in 10 insurers cited the “overuse of care” as a significant cost driver due to medical professionals recommending too many services or overprescribing, the survey found. Insured members’ poor health habits — such as unhealthy diets, sedentary behavior, tobacco use and excessive use of alcohol — contribute to the growing incidence of cardiovascular disease and also drive up medical costs, the insurers noted.
- “Employers are facing both higher cost increases as well as the potential for significant volatility, making it even more difficult to budget and plan. Faced with this environment, inaction is not an option,” Debby Moorman, head of WTW’s Health & Benefits, North America, stated in a release. “By understanding the factors that affect healthcare and drive costs in their populations, employers can effectively combat the ever-present threat of rising costs.”
Dive Insight:
Cancer, cardiovascular and musculoskeletal conditions remain the most costly medical issues, according to the 266 insurers from 66 countries who responded to the WTW survey this past summer. However, the highest number of incidents, according to claims filed in 2023, involve musculoskeletal issues, a growing number of insurers said.
Musculoskeletal disorders are typically associated with carpal tunnel syndrome and chronic neck, shoulder and back pain, the global advisory firm explained. It cited poor ergonomics in employees’ home work environments and a sedentary lifestyle as key factors.
Employees are also struggling with mental health issues, including anxiety and depression, the WTW survey found. Over the next 18 months, insurers expect these issues —which can affect overall employee well-being and productivity — to remain among the fastest-growing conditions, by both cost and claims, the firm said. In the Americas, mental health is the top condition by incidence of claims, according to the survey.
The finding comes as some companies consider pulling back on mental health benefits upped during the pandemic. Indeed announced after Thanksgiving that it would no longer provide employees a monthly day off meant to boost well-being, although the job site platform will continue to offer unlimited paid time off, which allows employees to take time off when they need it, a spokesperson previously told HR Dive.
Employers in the U.S. may also be questioning benefits coverage for new high-cost obesity management drugs, WTW said. The FDA recently approved Zepbound — already available to treat Type 2 diabetes — for obesity treatment. Also, a clinical trial of Wegovy, FDA-approved for chronic weight management, showed that treatment with the drug reduced the risk of cardiovascular disease.
From the providers’ standpoint, inflation is further affecting the underlying cost of care, WTW said. In 2023, the average cost of employer-sponsored health insurance rose 5.2% per worker, reaching more than $15,700, according to a recent survey by consulting firm Mercer. Smaller businesses face even sharper hikes, with an average-per-employee cost of $16,464, the Mercer survey found.
To help users better manage healthcare costs and provide speedy and efficient access to a range of medical services, 40% of insurance organizations globally added telehealth services in 2023, according to WTW.
Also, keeping in mind that some factors influencing cost may be out of their control, employers can take the following actions to make sure their healthcare benefits programs are more effective, WTW said: Review the program to see if it’s the right fit; review workers’ policy utilization and key drivers of use; make sure employees understand what’s available, when and how to use which coverage, and why it’s valuable to them; boost preventative healthcare; and prioritize well-being strategy and benefits.
