Health benefit costs to skyrocket in 2023, but US will lag

Listen to the article 2 min Dive Brief: The cost of health benefits is expected […]

Dive Brief:

  • The cost of health benefits is expected to climb an average of 10% globally in 2023, driven by inflation and higher healthcare use, according to a survey of medical insurers by advisory firm WTW released Oct. 13.
  • Cost increases are projected to be up year over year on every continent, skyrocketing as much as 18.9% in Latin America, but less so in North America where rates are expected to climb 6.4% in 2023, compared to 9.4% this year, the survey found.
  • The jumps in cost are the highest in 15 years, per the study, and relief is not on the way. Of the 257 insurers surveyed, 78% said they expect higher or significantly higher increases in costs for the next three years.

Dive Insight:

North America, and notably the U.S., likely will not escape the same jumps in costs as the rest of the world. Instead, those greater increases will be delayed, given the structure of the U.S. healthcare system, said Courtney Stubblefield, senior director of health and benefits at WTW.

In the U.S., healthcare is negotiated by a series of contracts between employees, providers and payers.

“Cost increases in the U.S. are going to filter in in phases as these contracts get updated,” Stubblefield said. “The contracts persist for a long time, and they set the cost basis going forward.”

Employers and insurers will need “to think and act differently” to control costs, Eric McMurray, global head of health and benefits at WTW, said in a news release. “Old solutions will not work. Cost shifting is not an option. There’s a critical need for innovation, strategy and new solutions to have any substantive impact. Those that don’t lead will fall behind in their ability to manage cost and retain key talent.”

 


The original article can be found at: HR Dive