Willis Towers Watson announced the 2021 results of the Global Medical Trends Survey, which is conducted every year between July and September.  Two hundred and eighty-seven leading insurers representing 76 countries participated in our 2021 survey. Global results presented in the report have been weighted using GDP per capita, which indicate that pandemic has resulted in a decline in trends of 2020 compared to 2019.

“Medical trend decreased significantly as the pandemic reduced accessibility to medical services; however, it is expected that utilization will rebound in 2021, driving trend back up toward previous levels”

2020 was an unpredictable and challenging year for everyone. Results of the Global Medical Trends Survey conducted annually by Willis Towers Watson prove the accuracy of this statement. Participated by two hundred and eighty-seven leading insurers representing 76 countries, the report states that 2020 was an extraordinary year globally due to the pandemic, and most countries are seeing a decrease in trend from 2019 to 2020. Some countries are even expecting a negative trend for 2020.

The report says many insurers and employers are reporting a decreasing trend in claims ratio in 2020, as most nonurgent treatments and surgeries were delayed especially between March and August. In turn, these delays created a need for some private facilities to make up for lost revenue in 2020. The Willis Towers Watson COVID-19 claims modeler suggests significant volatility in 2021 results, which are dependent on the impact of COVID-19 and whether or not a vaccine becomes available early in the year, who pays for it and the extent of its availability. In addition, there is uncertainty about how COVID-19 testing and treatment costs for 2021 will continue to be split between government, insurers and employers.

Those who contracted COVID-19 might create uncertainty in the future health trends 

The report underlines that further uncertainty around medical trend lies ahead in future years as we start to see the true impact of delayed treatment in 2020 and the long-term effects on those who contracted COVID-19. Nevertheless, the report says there is a silver lining there, as COVID-19 has greatly accelerated the adoption and use of telehealth; which, in turn, could help to offset those potential higher costs and provide a more efficient way for insureds to access and use health care in the future. And it may also increase utilization due to ease of access.
Overall, the report expects projected global trend to drop to below 6% in 2020 before rebounding back to above 8% for 2021 due to the catchup on delayed treatment, potentially leading to worsening health conditions and some unexpected cost increases coming through, such as those for personal protective equipment.

High expectations for the trend to spring back

According to the report’s region-based analysis, Asia Pacific region shows a significant drop in trend to 6.2% in 2020, but this will spring back above the 2019 trend to a projected 8.5% in 2021.
Medical trend in Europe is seen to have decreased to 4.2% for 2020, but a rebound is expected in 2021 to a trend rate close to the 2019 level of 5.8%.

Latin America has the highest medical trend numbers for 2020 and 2021. Even excluding the environment of hyperinflation in Venezuela, we see projected trend numbers of 9.0% for 2020 and a large jump to 13.6% in 2021.

Middle East and Africa was the only region in the report not to show a major decrease in medical trend for 2020 compared with 2019. The trend for 2020 is expected to be 8.7%, the same as for 2019. For 2021 we expect an increase to 10%.

The report shows that medical trend decreased significantly in the first half of 2020 in North America, and overall trend numbers were lower than in previous years; however, it is expected that utilization will rebound in 2021, driving trend back up toward 2019 levels.

Country-based results are also highly intriguing. The report states that COVID-19 has not had as much impact on cost or utilization in China as it has in other countries. The costs of medical care continue to increase for treatments, particularly those outside the scope of social security coverage. The central government is planning to eliminate the individual medical account and at the same time offer coverage for outpatient expenses under social security. The initiative was announced in September 2020, with more details to come on coverage. This is expected to impact the cost of treatment in the future; however, it will probably take a while for the initiative to be fully implemented given the variation in government funding at the provincial level.

Projected jumps in trends for Asia Pacific countries

Hong-Kong results indicate that the low utilization of medical services during the pandemic and the recession forecasted by the government are the two main drivers of the slowdown in medical trend for 2020 and 2021. Demand for medical tourism from mainland China has also dropped due to the travel restrictions and social unrest in Hong Kong.

India has not seen the same reduction in trend as other countries have for 2020. While utilization decreased during part of the year (April to July), India is currently in a situation with low claim frequency and average cost of procedures increasing. The government did, however, take some small measures to issue guidelines around pricing for COVID-19 tests and treatments, which helped with cost management to an extent. The year 2021 could see an increased rate of trend, higher than provisionally reported, as utilization starts to return to normal levels.

The report projects that medical trend rates in Indonesia will be slightly lower in 2020, not only because of the impact of COVID-19 on reduced elective procedures but also due to various other factors, including the increased utilization of BPJS Kesehatan (universal health insurance) especially for chronic/critical illnesses and ongoing costly treatments.

Medical trend in Malaysia is expected to continue its rise albeit at a slower pace compared with previous years. For 2020, the number of doctor visits and admissions dropped significantly during March and April due to the government-imposed lockdown (MCO), which has caused the overall trend to decrease. All of this means that there is a pause in 2020 trend compared with 2019, but an uptick is expected in Q4 2020 and in 2021 to catch up on delayed procedures.

Private medical care in the Philippines is largely dominated by an HMO (Health Maintenance Organization) model, which accounts for 80% of plans. While the frequency of inpatient and outpatient claims has definitely decreased in 2020, the average amounts per inpatient and outpatient claims are rising. Overall this helps explain why trend rates in the Philippines have edged up for 2020 to 8.5% from 7.8% in 2019 and are projected to continue increasing for 2021, although continued delay in treatment in 2020 could mean an even larger increase in 2021 than projected. . Overall trend in Singapore is still hovering in the 7% to 8% range for 2020 and 2021.

Medical trend in Europe is expected in 2021 to a trend rate close to the 2019

The report suggests that the significant drop in utilization and medical claims in France during 2020 can be attributed to the April lockdown period. Although utilization has started to rise again, overall the report expects a reduction of 5% in medical claims by the end of 2020. This is reflected in the decrease in medical trend from 4.2% in 2019 to 1% in 2020. Nevertheless, insurers project that this rate will start to increase in 2021, rising to 2.3%.

Medical trend in Norway continues to edge upward for 2020 and 2021. However, there is hope that the growing use of digital solutions and online services will help mitigate some of the future increase in trend. In Portugal, medical trend is expected to return to 2019 levels in 2021.

Economic conditions in Turkey impose a negative impact on medical trend

For Turkey, negativity of economic indicators are estimated to result in a decline in medical trends in the coming period. Telemedicine for outpatient care was implemented by a few big insurers during the pandemic. For the time being, the government has paused the use of private facilities as pandemic hospitals; however, it is expected that the government may reimplement this approach. With profit-sharing in place, many clients could receive dividends or experience rating refunds for the 2020 policy year. Some insureds are looking to add additional benefits like limited psychological therapy sessions or dietician services; however, the report says that these additions will need to be balanced against potential utilization increases in 2021.

High inflation continues to be one of the key factors driving medical trend in Argentina. The estimated 2020 medical trend is lower than 2019 and projected 2021.

In Canada, COVID-19 pandemic significantly reduced accessibility to certain covered medical services between March and June of 2020. In particular, significant reductions have been seen in paramedical services, vision care and emergency out-of-country medical care. This has reflected in the report as a projected trend for 2020 of 0.1%.

According to the report, the year 2021 could see a return of this deferred care as utilization rates for many service categories return to prepandemic levels in the USA. Overall, it’s anticipated that cost trends for 2020 and 2021 will be lower than in the previous five years.