The healthcare sector has been facing the uphill battle of escalating global medical expenses for an extended period. A recent survey indicates that these difficulties are likely to persist without a significant easing in the near future. Insurers worldwide are anticipating a 10.4% rise in medical costs in 2025, marking the third consecutive year of double-digit increases. In 2024, there was a 10.4% surge, and in 2023, it was 10.7%. Linda Pham, the global health and risk leader of Integrated & Global Solutions at WTW, stated in a statement, "With medical cost increases remaining at double-digit levels, employers will need to manage budget expectations and balance cost increases with data-driven business and health outcomes. The seemingly never-ending rise in costs poses a constant challenge for employers to take action in order to mitigate these unsustainable increases."

WTW - A Global Player in Healthcare Advisory

WTW is a prominent global advisory, broking, and solutions company. The recent survey was conducted between June and August 2024 and gathered responses from 348 health insurers across 75 countries. Additionally, input was received from WTW local brokers in 55 countries, covering a total of 90 countries. Projected medical cost increases differ by region. In North America, costs are expected to rise by 8.7%, 10.1% in Latin America, 12.3% in Asia Pacific, 9.4% in Europe, and 12.1% in Middle East/Africa.

Key Factors Driving the Cost Increase

The development of new medical technologies and pharmaceuticals has played a significant role in the global increase in care costs. Public healthcare systems worldwide are struggling to meet the high demand with limited resources, leading many individuals to seek private medical providers. Moreover, healthcare utilization has witnessed a significant surge in recent years, especially in mental health services, further driving up the overall cost of care.

These increases are likely to continue in the long term. According to the survey, about 64% of insurers expect "higher or significantly higher" global medical trends over the next three years. Additionally, 67% of insurers anticipate more global demand for healthcare services during the same time frame.

Ways for Employers to Address Rising Costs

Lindsey Loy Blau, the associate director of Integrated and Global Solutions at WTW, emphasized that employers should prepare for cost increases in 2025 and beyond. While some factors may be beyond their control, they can focus on key actions to enhance the value and effectiveness of their healthcare plans. For example, promoting preventive care, considering targeted behavioral intervention programs and other solution-specific vendors, and optimizing benefit spend through measures like pharmacy coverage and utilization review.

By taking these steps, employers can better manage the rising healthcare costs and ensure the well-being of their employees. It is crucial for them to stay proactive and make informed decisions to navigate the challenging landscape of healthcare costs.