Most nations grappling with increased healthcare cost trends

By | September 14, 2019

Dive Brief:

  • The United States is not the only nation whose healthcare systems are under considerable price and inflation pressures, a new global medical trend rate report from Aon concludes.
  • The gross global medical trend price increase will average 8% in 2020 (including general inflation), up from 7.8% this year, researchers found. General inflation will be be 3.1% next year, up from 2.9% this year.
  • As a result, many nations are seeing their health coverage subjected to more flexible benefits and wellness initiatives in order to better control costs.

Dive Insight:

The U.S. still has by far the most expensive healthcare system in the world, but it’s far from the only nation undergoing significant medical cost and inflationary pressures.

The country’s healthcare price trend is expected to rise by 6.5% in 2020, including general inflation. However, that’s 1.5 percentage points below the global trend. Inflation itself is expected to rise just 3.8% in the U.S. next year.

“Prices continue to drive trend while utilization of services remains relatively flat or decreasing,” the Aon report says. In neighboring Canada, inflation is expected to reach 4.1% next year.

The Asia-Pacific region is in even worse shape, with a medical cost trend rate of 8.7% for 2020 — 5.9% when general inflation is factored out. In China, medical prices are expected to rise just 7.5% while inflation is expected to reach 5% next year. In Brazil, medical prices will rise 15% next year while inflation will go up nearly 10.9%.

“We expect continued medical plan cost escalation due to global population aging, overall declining health, poor lifestyle habits becoming pervasive in emerging countries, continuing cost-shifting patterns from social programs, and heavy utilization of employer-sponsored plans,” the report says.

Heart disease is reported as the biggest cost driver, followed by cancer and hypertension. But diabetes was right behind those factors. And lack of physical activity, bad nutrition and high cholesterol were among the biggest global risk factors.

Countries have responded to those pressure points with wellness programs (offered by 80% of responding countries) and other initiatives.

However, the report concludes that “rising costs and the increased prevalence of chronic conditions are global phenomena. Employers will continue to face the prospect of added organizational costs and losses in employee productivity unless the factors contributing to these patterns are effectively addressed.”

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