Think galloping health insurance costs are a problem unique to American employers? Think again.
Medical costs paid by employer-focused health insurers rose by an average of 10 percent last year—identical to U.S. cost increases, according to a new survey of 37 countries by Towers Watson, a New York-based health benefits consulting firm.
The survey predicts nearly identical cost growth employer-sponsored health insurance for both the world and the United States this year.
“At two to three times the rate of general inflation, the ... medical trend is beginning to create significant affordability challenges for businesses—and employees—around the world,” an executive summary of the report states.
Cost growth is even high in Europe, hitting 8 percent in Switzerland, 8.7 percent in Spain and 8.8 percent in the United Kingdom.
The big drivers cited by health insurers around the world are new medical technology, overuse of care and the profit motive of health care providers.
“Health care is becoming a significant business sector: Health providers need to cover costs of investment in new equipment as well as maintain growing profit margins,” the report states. “Higher costs related to medical technology are also likely a result of increased employee demand for the latest and greatest, regardless of where they live.”
Towers Watson noted that many nations are scaling back their public health program benefits, leading to growing demand for employer-sponsored health benefits. “Health care benefits continue to transition from optional to required in most major economies,” its executive summary states.