NCPA - National Center for Policy Analysis

Rising Cost of Health Care Is Global Issue

March 3, 2011

In recent years, health insurance provision by employers has grown globally and is rapidly becoming the most valued employee benefit, particularly in developing markets.  In many countries, benefits provided under public health programs are being scaled back, both in terms of coverage and the share of costs covered.  As a result, employer-sponsored health plans have grown exponentially in the past decade, says Towers Watson, a consulting firm.

Companies increasingly recognize that poor workforce health, as well as medical and disability costs, are a drag on productivity and financial performance.  Health care benefits continue to transition from optional to required in most major economies.

As demand for these benefits has grown, so has the cost of providing them.  The rising cost of health care is a global issue that is quickly becoming one of the biggest financial challenges for multinational companies.  Some key findings from Towers Watson's survey include:

  • In 95 percent of the countries, the medical trend exceeded the rate of general inflation.
  • The rate of growth of the medical trend has slowed in emerging markets, whereas some developed markets are currently seeing a higher rate compared to five years ago.
  • Almost three-quarters (72 percent) of total survey respondents expect higher medical costs over the next five years.
  • The average gross medical cost trend for 2009 was 10.2 percent (6.9 percent net of general inflation); Latin America and the Middle East/Africa had the highest rates among the regions.
  • In 2011, the average medical cost trend globally is expected to be 10.5 percent; the medical trend is expected to be 2.5 percent higher in emerging economies than in advanced economies.

Source: "2011 Global Medical Trends," Towers Watson, March 2011.

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