The rising cost of employer-based health benefits in the U.S. is slowing down, but still rapidly outpacing costs in many other developed countries, including those across Europe.
In the United States, healthcare benefit costs are projected to rise 7.5% in 2017, according to a survey of 231 global health insurers in 79 countries surveyed by consulting firm Willis Towers Watson. That's a little bit slower than the 7.8% increase experienced in 2016, but still triple the rate of inflation.
General inflation grew 2.4% over the last 12 months, and the medical care component of the Consumer Price Index rose 3.4% in the last year. Private sector workers' compensation grew just 2.3% in the first quarter compared with the same time a year ago.
Health insurers blame the rising costs of inpatient and outpatient services, new medical technology and the overuse and overprescribing of services for the increase. Specialty drug prices are a key driver of rising costs.
Employer-sponsored healthcare, where 178 million people get their health coverage, is approaching $13,000 per year, about 12% of an employee's total pay.
U.S. employers are minimizing employee use of expensive drugs and procedures, shifting costs to employees through health savings accounts, and looking to accountable care organizations and telemedicine to help lower costs.
Globally, medical benefit costs are rising faster. They are projected are to grow 7.8% in 2017, up from 7.3% in 2016. High inflation rates in Latin American countries, particularly in Venezuela, are helping to drive up global medical costs trends. In Venezuela, medical costs are growing at a rate of 293%.
European countries have experienced the lowest medical cost growth, though still above inflation. Benefit costs across Europe as a whole are predicted to rise 4.5% in 2017, up slightly from 4.3% in 2016. That's because the social security and national health systems in many European countries provide a large level of coverage to citizens, said Francis Coleman, head of global health and benefits at Willis Towers Watson.
In France, the cost of employer-based medical benefits is expected to grow by just 2% in 2017. Benefits in the United Kingdom are predicted to grow by 5%.
