Balancing cost containment and quality in medical coverage

While employers and insurers focus on cost containment for 2024, inclusivity and quality remain key considerations
General inflation has been top-of-mind globally for the last two years. It has affected individuals’ cost-of-living, as well as businesses in terms of increased pay demands, higher prices, and challenging operating environments.
As medical inflation rates tend to be run higher than general inflation, related insurance pricing is inevitably effected, according to Mercer Marsh Benefits Health Trends 2024, our global insurer research report. After end-of-year results are analyzed, we expect premium increases in 2023 to be higher than in 2022.
Given this anticipated trend, employers face a difficult balancing act. Skills shortages are constraining growth in many sectors; attracting, retaining, and engaging employees with good quality benefits provision will continue to be a priority. At the same time, our research indicates that around one- third of markets with double-digit percentage increases in the cost of cover. This will put pressure on HR teams to rein in the scope and breadth of coverage.
Cancer is a major source of claims
What were the top causes of claims in 2022 based on your book of group or overall business?
Claim dollar amount (global) | Claim frequency (global) | |
---|---|---|
1 | Cancer | Diseases of the circulatory system |
2 | Diseases of the circulatory system |
Cancer |
3 | Musculoskeletal conditions |
Respiratory conditions |
4 | Gastrointestinal diseases |
Musculoskeletal conditions |
5 | Respiratory conditions |
Gastrointestinal diseases |
Employer supports for individuals with health conditions
Healthcare is transforming
Broadening the definition of cancer support is one example of how healthcare is transforming, often by leveraging digital health. In most of the world’s regions, our survey findings reveal a perception that public health services have deteriorated and health service provision has declined since the onset of COVID-19. On the flipside, private healthcare is improving in both scope and quality.
Select digital health services, including telemedicine, are now well-embedded in most private health insurer offerings. Other digital solutions offer great potential for the next five years, including AI-driven tools that permit remote patient monitoring and offer first-line diagnosis and pharmaceutical developments.
Cost-containment is a priority
Percentage of employer plan sponsors aiming to reduce plan coverage to manage costs
Based on your experience with recent medical plan renewals which of the following objectives do you think most employer plan sponsors will prioritize over the next year?
Reducing plan coverage to manage cost
Global 2023
Global 2024
Making plan improvements to help address attraction, retention and engagement
Global 2023
Global 2024
Affordability of public and private healthcare
Reducing plan coverage to manage cost
Global | Asia | Europe | Latin America and Caribbean |
Middle East and Africa |
|
---|---|---|---|---|---|
Scope | |||||
Better | 34% | 49%(+) |
15% | 21% | 43%(+) |
Worse | 18% |
6% | 38% |
31% | 13% |
Quality | |||||
Better | 29% | 48%(+) |
10% |
13% |
27% |
Worse | 28% |
12% |
48%(-) |
38% |
23% |
Affordability | |||||
Better | 22% |
31% |
13% |
8% |
33% |
Worse | 29% | 22% |
35% |
42%(-) |
27% |
Access | |||||
Better | 19% | 31% | 8% | 3% | 23% |
Worse | 48%(-) | 33% | 73%(-) | 59%(-) | 39% |
Inclusivity gaps need further action
Providers have sharpened their focus on broader aspects of inclusivity, for example making sure that communications are inclusive and accessible. There has been progress in expanding cover for diagnoses, learning supports, and occupational therapy to support neurodiversity. Although there is progress, the research highlights that insurers are less engaged with ensuring diversity in their own medical provider networks and in using member demographic data to proactively address health care gaps and needs. Significant care gaps remain, especially around women’s/reproductive health and mental health support.
Women’s/reproductive health benefits present a mixed picture. Cover is patchy across regions. For example, support during pregnancy is limited, with just 21% of insurers globally saying that they support high-risk pregnancies.
Mental health remains a workplace and societal challenge. Insurers across all regions, except Middle East and Africa (MEA), identify emotional and mental concerns as a top-five risk factor for medical claims. Providers are exploring additional areas of support, notably around coverage of targeted services for children, teenagers, and parents. Health Trends 2024 research shows this is valued highly by employees.
Top services typically covered/ provided
Inpatient treatment
Coverage for psychological and/or psychiatric counseling sessions (outpatient)
Coverage for prescription medications prescribed for mental health (outpatient)
Top services insurers don't cover or provide but are considering
Virtual advice via chat, powered by artificial intelligence (no human involved)
Training to recognize and address own and others’ mental health challenges
Coverage for targeted services for children, teenagers and parents to assist with mental health, socialization and learning issues faced by youth
Balancing cost containment and quality
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