Posted on Jan 21, 2011 by Sergio Ulloa
The provision of employer-provided health insurance is expected to increase by an average of 10.5 percent globally during 2011. This assessment is identified by specific regions worldwide in a report by global professional services firm Tower Watson.
The Latin American region is expected to experience the largest cost increase this year at 13.7 percent, followed by North America at 11.6 percent. The Middle East and Africa are forecast to see an increase of 10.2 percent, as is the Asian-Pacific region, while Europe is forecast to generate the lowest increase in the categorization at 9.1 percent.
Global medical cost trends between 2009-2011
All figures are shown as a percentage increase.
The main findings from the survey were that 95 percent of the countries included in the survey experienced an increase in medical cost trends exceeding the rate of general inflation. The report also found that medical costs are likely to continue to increase in double-digit numbers over the next 5 years, representing a challenge for companies providing health insurance for employees. Despite increasing costs, the report recognizes that companies appreciate the benefits of providing health insurance for employees as a method of maintaining a healthier workforce and resultant higher attendance levels.
The Tower Watson report is based on surveys conducted between September and October 2010 and includes information from the world's leading health insurers offering medical insurance solutions to employers across 37 countries throughout the regions of Africa, Asia, Europe and the Americas. Data was used from 170 insurers in total recognizing the significance of the market share held in each country. Health insurers taking part in the study were asked to provide information regarding medical cost trends in the countries where they had a presence.
In addition to analyzing global medical cost trends by region, the report entitled - 2011 Global Medical Trends - looked into market trends in the provision of health insurance distinguishing effects between advanced and emerging economies. The findings indicated that emerging economies will see the bigger increase at 11.8 percent, while a 9.3 percent increase is forecast for advanced economies.
Countries such as Chile, the United Arab Emirates, South Africa, Brazil and the Philippines were categorized among emerging economies, while the US, United Kingdom, Italy, France and Switzerland featured as advanced economies. Switzerland is expected to incur the biggest increase in cost trends over the past four years at 6.7 percent within the advanced economies, with Chile seeing the largest jump in medical cost trends at 9.8 percent in the emerging economies.
Towers Watson's, senior international consultant, Francis Coleman, said: "The growing demand for private healthcare, particularly in developing nations, has placed enormous upward pressure on the cost of providing this valuable employee benefit. With double-digit medical cost increases now the norm, there appears to be a shift among employers and insurers toward a more holistic and consumer-directed approach to healthcare - one that helps employees to become more aware of risks and more responsible for maintaining a healthy lifestyle."
The survey highlighted the growing corporate interest in wellness programs. This feature is applicable to all regions, with the majority of respondents adding some kind of wellness element to their healthcare packages. It was noted that globally 72 percent of respondents offered clients lifestyle and health education programs in addition to other popular components including personal health assessments and reports offering chronic condition and disease management programs.
"The clear interest all regions are showing in employee wellness is encouraging, and we expect that wellness features will play a greater role in managing global medical costs," said Nicole Serfontein, a senior international consultant with Towers Watson.
In recent years, health insurance has grown in popularity as a fringe benefit offered by employers to its workforce and is becoming a valuable benefit in attracting and retaining staff. In particular, the demand for corporate health insurance in countries with developing economies has been increasing as the workforce market has become more competitive. Changes in state funded health services resulting in some discretionary treatments being cut back or refused has highlighted the benefits of corporate insurance.
The more stringent application of health and safety laws in the workplace has also added to the benefit and need for company provided health insurance.
Insurers reported two significant factors driving up employer based medical insurance costs; these were; A) the increasing costs for treatments partly due to advances in medical technology and, B) employees making an increased use of corporate medical insurance in some cases for treatments of a non-essential nature not available under public run health systems. These factors together with the insurance companies drive to improve profit margins and maximize market opportunities will have contributed to the uplift in the overall cost of corporate provided medical insurance.
Health insurance providers still use tried and tested methods in order to control costs, such as coinsurance, deductibles, contracted networks and pre-approved products. While the emphasis on the benefits from taking a holistic approach to healthcare is being widely used as an additional method in an attempt to control health costs.