2020 Global Medical Trends Survey Report

Executive summary

The 2020 Global Medical Trends Survey sees a continuation of previous, modest increases with one significant change that should be of concern to insurers and employers alike.

The cost of medical care is rising at a similar rate to previous years, a rate that remains relatively stable. The global trend is for a projected 6.8% increase in 2020 where in 2019 it was 6.7%. The most dramatic rise is in the Middle East and Africa, where costs are expected to jump to 9.3% from 8.5%. The European rate of increase will remain stable at 4.3%, and in Latin America medical costs are projected to decrease from 12.2% to 11.7%.

Beyond these averages, each region has countries where health care policy, political instability or a combination of the two have conspired to significantly raise the projections. In Latin America, Venezuela is predicted to see a dramatic increase of 180% and so pushes the average higher, while the Middle East and Africa is the region seeing the most marked increases. There were not enough responses from the countries that saw the greatest rate of increase to draw a reliable conclusion, but clearly many show that political instability can lead to medical inflation.

Cancer, cardiovascular diseases, and conditions affecting musculoskeletal and connective tissue remain the top three conditions by cost at 83%, 55% and 46% respectively, and also by incidence. They are projected to remain so over the next five years. What is noticeable, however, and what confirms a trend identified in the 2019 report, is that mental and behavioral disorders will become increasingly significant.

Within the next five years, 27% of health insurers predicted that mental and behavioral conditions will be among the three most common conditions, and 26% predict that they will be among the three most expensive. This will bring uncertainty and challenge existing models of health care.

This is the reason why mental disorders are the focus of the 2020 Global Medical Trends Survey. You can read more about the research behind the conclusions and about the likely consequences in the special report section titled The mounting crisis of mental health.

A little less than half of health insurers in all regions are anticipating higher or significantly higher medical trends over the next three years. The global trend is that 41% of insurers are predicting higher costs over this period, and 4% are predicting significantly higher costs. In Latin America and Asia Pacific, just 35% predict higher or significantly higher costs while in the Middle East and Africa this figure is altogether higher, with 57% expecting an increase — the highest total, of any region, by some distance.

Projected medical trend increases over the next three years.

Key findings

• There are some decreases, some stability and some modest increases. An absence of significant change was one of the defining characteristics of the 2020 study. The increase in the Middle East and Africa is projected to be 0.8%. This gentle rise is as extreme as the 2019 figures get. The increase in Asia Pacific will remain the same while Europe rises from 4.2% to 4.3%. Latin America will see a slight decrease from 12.2% to 11.7%. The cost and incidence of complex conditions are set to grow, however, suggesting that insurers should not be complacent.
• National averages can distort the international picture. The Global Medical Trends Survey relies on averages across regions, and these averages can be distorted by developments in a comparatively small number of countries. An increase of 60% is projected in Zimbabwe, a rise of 10% over last year and 35% on 2018. This was repeated elsewhere, if less dramatically. In Zambia, there is projected to be a 5% increase to 25% in 2020, and in Cote d’Ivoire there will be a rise to 13.3%. Both Congo and Chad will see a rise to 15%.
• Be careful before translating local experience into regional reality. One of the problems with taking averages for a region is that individual stories can be obscured or overlooked. In Europe, where the rates of increase are predicted to remain slight, Hungary and Turkey are significantly higher at 9.6% and 19.2%, respectively. Both countries have a decaying public system, and private provision is being used by citizens who have grown exasperated with waiting times and inefficiency.
• Overuse of care increases costs. Both patients and practitioners are seen by insurers as using too much care to no great effect. When insurers were asked to cite the three most significant factors driving medical costs per person, 73% cited an overuse of care by practitioners offering too many services, while 66% saw insured members as responsible for overusing care. This balance between prudence and largesse is a hugely difficult one to strike for any insurer.
• Technology has its price. Asked which external factors were driving the increase in medical costs, 70% of insurers identified new technology as being responsible. This largely replicates 2019’s previous results and speaks to insurers’ darkest fears that the conditions covered by their policies can be treated more effectively with new technology but that this treatment is more expensive.
• The most common policy exclusions are for alcohol and drug use, and HIV/AIDS. There continue to be significant gaps in coverage for these conditions. There is a clear global trend for group policies covering less than 50 employees to exclude people with preexisting conditions — 50%, falling to 32% when the group policy covers up to 500 employees. But when it comes to alcoholism and drug use as well as HIV/AIDS, there is much more unanimity. For group policies of different sizes, between 49% and 53% exclude on the basis of alcoholism and drug use, and between 47% to 50% exclude on the basis of HIV/AIDS.
• Member coinsurance is the top cost management method. Contracted networks of providers for all treatments is still the main cost management method across all regions with a combined total of 74%. Just behind it is the limiting or capping of certain services. This is most popular in the Middle East and Africa, more than any other market and any other method, with 83% of respondents identifying it as being the most effective.
• Pharmacy services cost increases appear to be slightly moderating compared with prior years outside of the U.S. Nevertheless, 61% of respondents in Latin America saw mental health costs as being responsible for a moderate increase in health care costs with a further 5% seeing them as responsible for a significant increase. This trend was broadly reproduced across each of the regions, with 60% in Europe seeing it as responsible for a moderate increase and 47% in Asia Pacific similarly minded. The Middle East and Africa is an exception, with just 24% seeing it as responsible for a moderate increase.
• Over 40% of insurers think that medical expenses will increase. Global figures suggest that just over 40% of respondents see medical costs as trending higher over the next three years. Asia Pacific is the most optimistic region, with 32% agreeing that there will be a moderate increase and 12% thinking that costs will be lower. However, 54% of respondents in the Middle East and Africa thought that medical expenses would increase; none thought they would be significantly lower, and just 1% thought they would be lower.
• Europe continues to be an anomaly. The prevalence of socialized medicine or systems that rely on at least some degree of state coverage means that Europe has always behaved differently than other markets. This trend continues. While member coinsurance continues to be rated as “typical” or “very typical” in most regions, in Europe only 10% of respondents see it as very typical and 17% see it as typical.