Global medical inflation

As insurers look to 2025, medical inflation is at the forefront of people's minds. The information below is based on our research around where global medical inflation stands, what the core causation is, and how insurers can protect against it.

Where it stands

Top healthcare analyst data project global medical inflation to increase by 9–10%, with variation across regions:

• Latin America potentially surpassing 15%

• Asia-Pacific approximately 9%

• North America approximately 8%

• Europe approximately 8%

What’s causing It

The cause of inflation can also vary by region, but some areas we consistently see include:

• High demand, limited resources, increased labour cost

• Skyrocketing cost in cardio, oncology, and MSK

• Rising mental health impact

• Advanced technology

• Overuse/overprescribing

• Accelerated pharmacy cost

• Unnecessary medical services

• Fraud, waste and abuse.

What insurers can do

The cost management strategies below can be incorporated to lower cost:

Value based care programmes encourage efficient care and reduce unnecessary treatments. In our international market, most services are reimbursed under fee-for-service, but there is evolving transparent, fixed pricing for specific procedures. This means the cost of a surgery, plus all related fees (the surgeon, facility, anesthesia, implants, recovery, preand post-operative visits, and prescriptions) can be determined upfront.

Rx Management focuses on monitoring Rx interactions, ensuring medication adherence, and monitoring Rx use. Research suggests that US$250 billion of Rx costs, in the last year, came from non-adherence, mismanagement, negative drug interactions and resulting readmissions. An Rx management programme creates a white glove service with experts managing dispensing, patient education,

Value based care
programmes encourage
efficient care and reduce
unnecessary treatments

and coordination providing visibility into the patient’s drug interactions to all stakeholders.

Telehealth continues to expand and redefine how diagnosis, second surgical opinion, delivery, and follow-up care can become more efficient for a range of medical services including primary care, specialist care, prescription drug fills, mental and behavioural health programmes, and care navigation support for acute illnesses. Telehealth and virtual care continue to improve globally and reduce the need for costly urgent care.

Provider relations and reimbursement optimisation is the design of how plans contract and build relationships with providers through network and non-network strategies. A single network strategy is no longer an option to ensure the lowest possible cost. It is important to review different payment arrangements with providers, such as payments based on historical data, claim auditing and custom contracting to meet insurer’s specific needs.

Telehealth and virtual care
continue to improve globally
and reduce the need for costly
urgent care

Also, provider education and building an understanding of a specific population goes a long way. As an example for US care, there could be a combined strategy that includes PPOs, telehealth, payments based on historical data, direct procedural or geographic carve out contracts, flat fee arrangements for high cost MSK, Rx management, and provider education on specific populations. By integrating various approaches that meet their populations needs, insurers can realise lower cost of care.

Member education and engagement can encourage members to make cost-effective healthcare decisions. By empowering patients to better understand their diagnosis, treatment, and Rx costs and options, we can create a more prudent use of services. This can be accomplished with information as members enroll in plans and with a white glove medical and Rx coordination approach for members as the need for services arise.