It’s going to be another year of stiff increases in companies’ costs for medical benefits in 2024 — not quite as stiff as those experienced this year, but unsettling nonetheless.
In North America, the projected health care cost increase for next year is 9.4%, following a 9.8% upward surge in 2023, according to Willis Towers Watson’s 2024 Global Medical Trends Survey. Globally, the corresponding figures are 9.9% and 10.7%.
The survey also revealed that 58% of those polled — 266 health insurers in 66 countries — anticipate higher or significantly higher increases from 2025 through 2027. In North America, though, just 45% said so.
But why are next year’s increases expected to be slightly down from 2023 levels? According to Willis Towers Watson (WTW), the spread of COVID-19 in waves during the pandemic produced wide swings in the utilization of acute medical and outpatient care that have largely leveled out or waned.
“The spike in elective procedures, consultations, and other medical care resulting from delayed or postponed care due to the pandemic has eased,” WTW said. “However, the severity of some missed diagnoses and the care needed now has worsened.”
In addition, inflation, which was a significant factor in driving up health care costs, has moderated in 2023 and is expected to continue to fall going into 2024.
The high cost of new medical technologies is a key reason for the persistently high annual cost increases, noted Linda Pham, senior director of integrated and global solutions for WTW. More than half (57%) of the survey respondents cited such technologies — from AI-powered diagnostic tools to gene therapy — as a top cost driver.
The impact of technology on next year’s costs will be particularly acute in the Asia-Pacific region, “where rapid development of medical technologies has occurred in an effort to catch up with other regions,” WTW said.
But according to insurers, the leading cost driver continues to be overuse of care — cited by 59% of those surveyed — due to medical professionals recommending too many services or overprescribing.
“This commonly occurs where systems are overburdened and providers have limited time to spend with patients,” WTW noted. “As a result, members are directed to inappropriate treatment, bypassing preventive care steps, resulting in inefficient use of the health care plan.”
Still, there is progress to report on this front. A year ago, far more insurers (74%) said overuse of care was a significant cost driver.
Nearly half of the insurers (49%) indicated that poor health habits are currently among the top cost factors, while 47% pointed to the underuse or lack of preventive services.