Healthcare costs increasing around the world, survey shows

by Ray Clancy on July 11, 2012

Average medical costs increased by 9.8% in 2011

Expats could face paying more as healthcare costs are increasing around the world with some countries, mostly outside Europe, seeing double digits rises.

Average medical costs increased by 9.8% in 2011 and are projected to rise by a similar level in 2012, according to a study by professional services company Towers Watson.

While rates have stabilised in some countries, a number of growth markets in the Asia Pacific region and Latin America continue to face increases above 10%.

Although traditional cost management approaches still dominate, wellness interventions are growing, with insurers increasing their wellness capabilities through in house or partner resources, the report says.

The prevalence of employer sponsored health benefits continues to grow rapidly across more countries and more health insurers, according to the survey of 237 leading medical insurers in 48 countries. It found the cost of employee medical benefits is expected to increase 9.6% in 2012. This is slightly lower than the 9.8% increase in 2011 and the 10.2% increase experienced in 2010.

The reasons for rising costs include new medical technology causing overuse of care, practitioners recommending too many services, and providers’ profit motives.

‘In some markets, these costs are exacerbated by fragmented systems, poor infrastructure and inefficiencies that drive up the use of care. In addition, rising health and lifestyle risks the world over including increased obesity rates and smoking related illnesses have accelerated higher costs for employers. Aging populations also exacerbate the strain,’ says the report.

In India medical insurers are trying to adjust for increased utilisation and provider costs, but also seeking to effect market corrections to earlier pricing practices in which medical coverage was often heavily underpriced or subsidised.

China expects continued high rates of increase, close to 10% in 2012, driven by employee demand for private health care as well as the expanding private insurer landscape. Even the more developed health care markets in Asia Pacific are not immune to rising medical trend rates with Singapore and Hong Kong are consistently seeing trend rates of 8% to 9%.

Compared to other regions, Europe is currently seeing the lowest level of increases. While one would expect some countries with austerity measures in place, such as Greece, to experience a lower medical trend, costs are also falling in France. Russia’s trend rate continues unabated at 12% for 2011 and 2012 and in the UK it is expected to reach almost 10% in 2012.

In Latin America the cost of private medical insurance is highest in Brazil with a rise of 12% predicted for 2012. Costa Rica, Guatemala, Honduras and Panama are expected to see rise of 11% to 12%. Mexico saw a slight drop in the projected trend rate for 2012, down to 9%, and Chile shows a significant drop to around 11%.

In South Africa costs have dropped from 12% in 2009 to 8% and most major locations in the Middle East are experiencing trend rates of around 11%, including the United Arab Emirates and Saudi Arabia.

In North America rises are expected around the 11% mark with Canada falling from 12.5% in 2011 to 10.5% in 2012.

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