Medical Cost Increases Outpacing Inflation Globally

February 6, 2008 ( - Medical cost increases for employers throughout the world are expected to accelerate over the next five years, and in the majority of countries are outpacing the general rate of inflation, according to a poll of insurance companies conducted by Watson Wyatt Worldwide.

Nearly three-fourths (71%) of respondents indicated they expect higher or significantly higher medical cost trends over the next five years, Watson said in a press release. More than eight of 10 (81%) insurers reported that medical costs are eclipsing the general rate of inflation in their country.

The poll results showed an expected 11% increase in medical cost trends in the U.S. for 2008, compared to 8% in 2007. “Many of the factors causing U.S. employers to experience significant increases in their health care costs – such as increased utilization, expensive medical technology and an aging population – are having comparable effects throughout the world,” said Francis Coleman, a senior international health care benefits consultant with Watson Wyatt, in the press release.

Insurance companies in Asia and Africa are expecting double-digit increases in employer medical costs in 2008 (19.6%), with the exception of companies in Hong Kong (9.1%) and Singapore (7.5%), according to the poll. The same is true in Latin America, except for Brazil and Chile, where costs are expected to increase by around 7%. In Europe, most insurers – except those in Italy (11.3%) – are projecting increases in the single digits.

Poll results are based on a Watson Wyatt survey of 85 insurance companies that provide medical insurance to employers throughout Asia, Africa, Europe, and the Americas.