Recent studies have shown that medical inflation trends continue to rise unabated for both individual and employee sponsored international health insurance plans. The average global annual inflation trend for medical costs may be 10% overall, but the percentage is higher in select countries such as the USA and Canada, where many expatriates are covered and may seek treatment. Companies such as Aetna Global and Cigna International often report medical inflation trends of 12 to 13%. This trend rate is also shared by many expat insurance providers.
What is driving the increase in medical costs? Many providers cite a large number of factors such as:
- poor health habits such as obesity
- drug costs increase, especially with biologic drugs which can easily run in the tens of thousands of dollars
- compliance with local coverage requirements, including the Affordable Care Act in the USA
- defensive medicine where doctors order unnecessary tests to ward off legal actions
- new healthcare technologies are constantly being introduced and demanded by patients
- demographics and age of the population, which is related to the size and age structure of the population that are using health care services
- the intensity of care, which refers to increases in the care and services per unit of care delivered
These factors and more are having major impacts on the claims that are being incurred by domestic and international health insurers. These costs have to be passed onto individual policy holders and employer sponsored expat group insurance plans. Expatriates and their employers need to adapt their global medical insurance plans to make sure the coverage meets their needs and budgets. Some may choose to reduce costs by:
- increasing the size of deductibles
- increase coinsurance levels
- have employees share in the premium payments
- remove certain medical procedures and possibly restricting coverage areas
It is important to work with an independent global insurance specialist firm such as Expat Financial, which is a division of TFG Global Insurance Solutions Ltd. We can analyze the coverage needs of both individual expatriates and their employers and then search the market for a plan that will meet their respective needs and budgets. Learn more about the international group insurance plans we offer expat employers.