ARLINGTON, Va., April 28, 2016 (GLOBE NEWSWIRE) -- The cost of employee health care benefits around the globe is trending higher, driven largely by the higher cost of hospital and inpatient services, medical technology, and the overuse of services, according to a survey of medical insurers by Willis Towers Watson (NASDAQ:WLTW), a leading global advisory, broking and solutions company. 

The 2016 Willis Towers Watson Global Medical Trends Survey found that medical insurers are projecting the cost of health care benefits to increase 9.1% this year, an increase from 8.0% in 2015 and 7.5% in 2014. Insurers in the Americas (not including the U.S.) and Middle East/Africa regions are projecting double-digit average increases for the third straight year. The European region continues to show the lowest level of increase. Other Willis Towers Watson research shows U.S. employers are experiencing health benefit cost increases that are averaging several percentage points lower than those in other countries.

More than half of insurers in all regions anticipate higher or significantly higher medical trend over the next three years. Middle East and Africa insurers are particularly pessimistic, with 85% expecting trend in the next three years to be higher or significantly higher.

Global Medical Trends: 2014 – 2016

  2014  2015 2016*
Global  7.5% 8.0% 9.1%
Americas (ex-U.S.) 10.6% 13.3% 15.3%
Asia Pacific  7.3% 6.4% 7.9%
Europe  5.3% 5.2% 5.7%
Middle East/Africa  10.3% 12.6% 12.2%

 *Projected

“Rising medical costs continue to be a major issue for employers,” said Cecil Hemingway Co-Head of Health and Benefits, Willis Towers Watson. “In the decade of running this survey, we have seen global medical trend continue to hover at double digit levels in many countries. However, the results by country can vary greatly. Some countries are seeing the rate of increases slowing while others are experiencing medium-term increases driven by demographics and economics, which could give way to a longer-term slowing of cost increases.”

According to the survey, hospital and inpatient services are the highest expenses driving the increases, although all other services are not far behind. When asked for the most significant cost-driving factors outside the control of employers and vendors, more than half (58%) cited the high cost of medical technology followed by providers’ profit motives (44%). Interestingly, three in four insurers (75%) ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs when it comes to employee and provider behavior. 

“While employers and vendors can’t control the cost of medical technology, they can mitigate the cost and overuse of services by making employees better health care consumers. Encouraging prevention and implementing wellness programs are just two examples of how to accomplish this. Employers can also implement provider and vendor management programs to better control overuse of services,” said Francis Coleman, Senior Leader of Health and Benefits, Global Services and Solutions, Willis Towers Watson.

Other findings from the survey include:

  • Primary diseases globally. Cardiovascular disease (62%), cancer (59%) and respiratory illness (37%) remain the top three diseases reported worldwide.  Respondents don’t expect the situation to change in the next five years.

  • Managing medical trend. More than three-fourths (78%) place limits on certain medical services to help manage costs.  More than half (57%) use contracted networks, while 56% require preapproval for scheduled inpatient services.

  • Health promotion programs. Almost three in five (58%) currently offer a personal health risk assessment/appraisal program either directly or through a partner. Another 14% plan to offer a program in the next 12 months. A similar percentage (58%) offers biometric screenings, with another 6% plan to offer them.

  • Claim coding systems. There has been an increase in use of globally accepted coding systems as opposed to a local in-house coding system, compared to 2014. 43% of respondents currently use ICD-10 as a coding system to adjudicate medical claims while 22% use ICD-9. These systems make it easier for multinationals to get consistent claim data reports and facilitate data management.

“Insurance companies worldwide have significant opportunities to help employers reign in rising medical costs and improve employee health. Insurers that can work with employers and create benefit programs that meet ever-changing needs, provide useful and timely data, and help incorporate wellness initiatives into their health programs will gain competitive advantage,” said Coleman.

About the survey

The Willis Towers Watson Global Medical Trends Survey was conducted between October and November 2015, and reflects responses from 174 leading medical insurers operating in 55 countries. Most participants have at least a 10% share of the group medical insurance market in their country.

About Willis Towers Watson

Willis Towers Watson (NASDAQ:WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 39,000 employees in more than 120 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

Media contact
Ed Emerman: +1 609 275 5162  
eemerman@eaglepr.com

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