It’s no secret that in the US, healthcare costs are high. According to official estimates from the National Health Expenditure Accounts (NHEA), US healthcare spending grew by 7.5% in 2023 to US$4.9 trillion or $14,570 per person. Recent polls from health policy research organisation KFF show that around half of adults in the US say it is difficult to afford healthcare costs and that this burden affects the insured, with 48% of those covered by health insurance expressing concerns about affording their monthly premium. 

There are myriad factors contributing to these high costs, as Simon Jackson, Chief Growth Officer at GeoBlue, explained: “Costs are largely driven by advanced medical technologies, significant administrative expenses and a complex insurance ecosystem.” 

Naturally, this presents challenges for insurers, as John Spears, VP of Business Development and Marketing at Global Excel Management, articulated: “It’s an issue many insurers face today: rising healthcare costs in the US, in North America (and really around the world) versus creating and selling products which offer the coverage, benefits, premiums and market differentiation demanded in an increasingly competitive market. Layer in the growing compliance and data security issues and you have a real challenge. Fortunately, there are solutions, but these often require changes to the way IPMI products are created, sold and serviced,” he told ITIJ.

Quality care at competitive rates

Indeed, international private medical insurance (IPMI) providers have adopted approaches that facilitate the provision of attractive and comprehensive coverage with high-quality benefits while controlling costs. Jackson said that an effective approach taken by GeoBlue is offering tiered benefit structures: “These allow customers to choose coverage levels based on their needs and budgets. For example, plans may include comprehensive benefits such as outpatient care, maternity coverage, and wellness programmes for high-tier plans, while offering essential coverage for more budget-conscious clients.” 

Spears said that success in controlling costs while still ensuring a positive customer journey hinges on a number of critical factors: “The key is being able to offer a variety of different solutions, to be creative and think outside the box, and of course to have the buy-in from the corporate client and the patient,” he stated. “In the past few years, insurers (or the corporate or government payers) have realised that the costs associated with those wide-open policies from a few years ago, where the consumer could get any treatment, in any location, at any time, and without regard for cost, are no longer sustainable at today’s competitive premium levels. At this point you have a choice: raise the premiums to match your costs or change the product. We strongly believe that it is possible to offer an excellent product with great customer experience that still performs financially.”

Costs are largely driven by advanced medical technologies, significant administrative expenses and a complex insurance ecosystem

Jackson pointed out that provider network management represents another key strategy. “By partnering with healthcare providers that offer quality care at competitive rates, insurers can negotiate preferential pricing and pass on savings to customers,” he highlighted. Additionally, digital health solutions can assist with cost reduction while maintaining quality. “By enabling remote consultations, GeoBlue is reducing unnecessary (and costly) emergency room visits and providing expats and students with access to timely medical advice without incurring high charges,” Jackson confirmed.

Encouraging cross-border care

It may be the case that some US policyholders are open to receiving care in a neighbouring country where healthcare costs are lower while quality remains uncompromised. 

Spears told ITIJ that there is a growing trend of offering incentives to receive treatment in particular geographical areas. “If we expand the product range slightly beyond the typical IPMI definition and include products like corporate expat coverage, student coverage, long-term retirees, government employees, etc., we are seeing incentives or benefits which involve steerage away from high-cost facilities areas which don’t offer the matching level of quality,” he revealed. “Currently we’re seeing more acceptance for treatment options in Europe and even in Canada. But other excellent global destinations exist.”

We strongly believe that it is possible to offer an excellent product with great customer experience that still performs financially

Jackson said that plan design is an effective way for insurers to help employers achieve their cost and coverage objectives. “Having a plan that offers higher levels of coverage outside the US is one way to incentivise treatment outside the US,” he told ITIJ. “These plans can also be offered to consumers who are cost-conscious and/or don’t have a need to seek treatment in the US. An example is the option to exclude coverage in the US for some of our consumer-purchased worldwide individual expat plans.”

A barrier here is the perception that certain healthcare facilities offer better healthcare than others, Spears stated. “With our current ‘travel for treatment’ corporate clients, the clear demand is to get treatment in the US, Germany, the UK and possibly France, in that order. Are there excellent treatment options available in other parts of the world? Absolutely, and we will often include them in our recommendations to our clients. But the preference for the US still outranks all the others combined,” he said. “Are there significant cost/quality differences just within the facilities in the US? Definitely. Some would easily be ranked among the world’s best; some offer incredible value for money; some have the expertise and technology to make them the true ‘go-to’ location for very specific treatments; others less so. The key is to look at the facts rather than the marketing spin.”

Jackson warned that regulatory differences could present challenges, but these can be circumvented with strong partnerships with relevant stakeholders. “Each country has its own set of healthcare rules and regulations, such as Canada’s publicly funded system versus the private, insurer-driven US model. Navigating these complexities requires insurers to establish strong relationships with regional stakeholders and remain compliant with local laws,” he stated. “These differences also come into play for services like telemedicine. Some countries have more progressive regulations around virtual medical guidance and whether a global or locally registered doctor can prescribe medication within the country the patient is located in.”

IPMI innovations

New technologies can be leveraged to help control costs and assist with consumer needs. “The IPMI market has seen significant innovations aimed at enhancing both cost efficiency and service delivery,” Jackson reflected. “Some of the most impactful solutions include: telemedicine and virtual care; utilisation management to provide comprehensive coverage while managing premiums responsibly; [and] artificial intelligence (AI), including speech analytics and the automation of operational processes to optimise efficiency and accuracy.” Data analytics can also enable insurers to “predict healthcare usage patterns, identify cost-saving opportunities, and optimise provider networks so we can offer customers better and wearable technology and health monitoring”. This technology can be leveraged by insurers “to monitor policyholders’ health metrics and incentivise wellness behaviours through premium discounts and proactive healthcare interventions”. 

Customers increasingly demand customised coverage tailored to their unique needs, such as optional mental health support, dental care or maternity benefits

Indeed, GeoBlue is expanding its AI capabilities to introduce innovative solutions aimed at delivering proactive and personalised healthcare experiences. “Some examples include the use of AI to translate claims and medical records to expedite the claims process and help members get reimbursed more quickly; document recognition and data extraction to help support member guidance; using AI to generate case and interaction summaries for service agents, enabling them to provide faster service and more informed responses; and providing personalised recommendations based on customer destinations, including information on provider and network availability,” Jackson explained.

Alongside the use of technologies to assist providers and consumers alike, IPMI products are becoming increasingly personalised to respond to and meet client needs. “The key is that these products are moving away from being ‘create it and forget it’ products,” said Spears. “One of the biggest things we see is insurers creating products which are highly personalised, where the consumer literally builds his own ‘unique’ policy, which is then dynamically priced. There’s a lot of technology involved in creating and administering these products, and that’s another area that’s blossoming very quickly.” 

Jackson agreed: “Customers increasingly demand customised coverage tailored to their unique needs, such as optional mental health support, dental care or maternity benefits.”

Other ways that policies are adapting include becoming increasingly flexible and modular, holistic and inclusive, as Jackson underlined: “There is growing demand for wellness programmes, mental health services, and preventive care. We continue to enhance our offerings to include holistic health benefits that go beyond reactive medical care. Customers also expect seamless, digital-first solutions, including easy policy management, claims submission, and virtual consultations via mobile apps. Furthermore, many employers and consumers expect to see benefits that reflect the diversity of their employees and that recognise the unique needs of different segments. There is growing focus on benefits for LGBTQ+ members, women’s health and neurodiversity, among others.” 

Insurers will continue to shift towards value-based healthcare models, emphasising health outcomes over service volume

An evolving market

Managing healthcare costs in the US will continue to present a challenge in future years. A survey by Mercer found that health insurance costs will increase by an average of 5.8% in 2025 while recent projections from PwC anticipate medical costs rising by 8% in group health plans and 7.5% in individual plans. “Demand for competitive IPMI products in the North American market remains very strong but these products will continue to change,” stated Spears. “Healthcare costs in North America are not declining and remain among the most expensive in the world. Consumer expectations have also evolved significantly. It’s an exciting time and we’re eager to see what’s around the corner.” 

Jackson agreed: “The North American IPMI market is poised 
for significant growth and transformation. Several trends are shaping its future. For example, with more professionals working remotely and businesses expanding internationally, demand for international healthcare coverage will continue to grow. In addition, insurers will continue to shift towards value-based healthcare models (for care provided in the US), emphasising health outcomes over service volume, thus controlling costs and improving quality. Furthermore, insurers will expand coverage to include mental health support, recognising its growing importance in overall wellbeing, especially for expats and students. In addition, ongoing changes in trade agreements, healthcare regulations and cross-border policies will influence how insurers operate and design their plans. Finally, the integration of AI, blockchain for claims transparency, telehealth and digital payment solutions will redefine how insurers manage costs and deliver services.” 

Despite the challenging nature of the North American healthcare market, by leveraging technology, cross-border care and personalised plans, providers can continue to meet customer needs and achieve long-term sustainability.