Towers Watson: Medical Costs Continue to Climb at Double-Digit Rates Worldwide

The survey’s authors expect the global cost of employee medical benefits will increase 9.6% this year. This is slightly lower than the 9.8% increase experienced in 2011 and 10.2% increase in 2009, but the survey expects costs to continue to increase at double-digit levels in four of the five global regions this year, with only Europe expecting to see single-digit increases.

As cost increases have remained somewhat constant, so have the top cost drivers. The three factors cited most often, which repeat from 2011, are new medical technology causing overuse of care (cited by 52% of survey respondents), practitioners recommending too many services (50%) and providers’ profit motives (31%).

Although the most popular methods of medical cost management remain contracted provider networks and preapproval for inpatient services (both cited by 57% of respondents), less traditional methods are receiving attention, too. More than two in five (42%) of respondents report using chronic condition or disease management tools. And more than one in four (29%) are using wellness programs.

The most common prevention feature remains the second medical opinion, which is offered by nearly 80% of respondents (both in-house and through a partner). Insurers are also increasing wellness services, such as health risk assessments and chronic condition/disease management programs, offering these either in-house or through the use of partners.