Health Care Cost Increases are Going Global

Rising healthcare costs are making the rounds throughout the world as it becomes the most desired benefit sought by employees.

According to a recent survey by Watson Wyatt Worldwide, employers throughout the world can expect to see their medical costs significantly increase over the next five years. In many countries like the United States where medical costs are expected to rise 11 percent this year, those costs will outpace the general rate of inflation, the survey shows.

“Rising medical costs have become a global issue that reaches far beyond the United States and other developed economies,” Francis Coleman, a senior international health care benefits consultant with Watson Wyatt , said in a press release. ““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.”

According to the survey, companies in Asia and Africa are expected to see double-digit increases, with the exception of Singapore and Hong Kong. Venezuelan companies are expected to see the steepest increase in 2008, at 25 percent, followed by Chinese companies at 19.6 percent, Saudi Arabian firms at 16.3 percent and Russian businesses at 15.7 percent.

Companies in the Netherlands and Switzerland are expected to see the smallest increases at 6 percent each. The survey polled 85 insurance companies that provide medical insurance to employers throughout Asia, Africa, Europe and the Americas.

Watson Wyatt didn’t say how much of the medical cost increases will be born by employees. But U.S. workers are taking on a greater share of the cost, paying both a higher percentage of the premiums and higher co-pays and deductibles. Healthcare experts say the trend will continue as employers look for ways to help trim medical cost expense and stay competitive.

Still, Watson Wyatt says the global trend presents certain opportunities for insurance companies. “Health care is fast becoming the most desired employee benefit worldwide, even in countries that support state-sponsored programs,” Ted Nussbaum, North America director of group and health care consulting at Watson Wyatt, said in the press release. “Given the similar factors driving health care costs around the world, multinationals have an opportunity to develop global solutions that engage workers and improve their health and productivity.”

Watson Wyatt is a global consulting firm providing employee benefits management services, technology, outsourcing and data services and investment strategies.