Managed Care Outlook

Worldview: U.S. health inflation not so bad

When it comes to runaway medical costs, the United States isn’t the only country with a problem. In a survey conducted by Watson Wyatt involving 85 insurers to global employers throughout Asia, Africa, Europe, and the Americas, 71 percent of respondents said they expect higher or significantly higher medical costs over the next five years, and 81 percent report that medical costs eclipsed the general rate of inflation in their country. The countries with the highest expected increases are in Asia, Africa, and South America.

Pharmacy directors and medical directors will need to adjust plan design and premiums accordingly, says Francis Coleman, senior international consultant at Watson Wyatt. “They can take some of the managed care techniques learned in the United States and adapt them to local countries and cultures.” Premium sharing, like member coinsurance, appears to be the most widely used form of cost-sharing arrangement globally.

Global medical costs (% change from previous year)
  2006 costs minus inflation 2007 medical costs (projected) 2008 medical costs (projected) Compared to current rates, expectations over the next 5 years
Above median
(yellow shading)
Top quartile
(orange shading)
Asia and Africa
Bangladesh −2.2 13.0 13.0 Higher
China 12.3 21.2 19.6 Higher
Egypt 2.6 15.0 17.5 Higher
Hong Kong 6.8 8.8 9.1 Higher
India 16.7 25.0 30.0 Significantly higher
The Philippines 6.5 11.4 11.5 About the same
Russia −2.8 13.7 15.7 Higher
Saudi Arabia −2.8 13.3 16.3 Higher
Singapore 5.3 6.5 7.5 About the same
France 3.7 6.6 7.3 Higher
Netherlands 4.5 5.2 6.0 Higher
Switzerland 2.4 7.5 6.0 Higher
United Kingdom 3.6 8.0 8.0 Higher
Italy 3.7 11.0 11.3 Higher
Brazil 4.9 5.9 7.2 About the same
Canada 10.0 11.5 12.0 Higher
Chile −5.9 6.5 7.1 About the same
Mexico 7.5 12.8 12.6 Higher
United States 5.4 8.0 11.0 Higher
Venezuela 14.4 25.0 25.0 About the same
Source: Watson Wyatt. Global Medical Trends: 2008 Survey of Medical Insurers

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