The outlook for global healthcare pricing in 2024 and the strategies international travel insurance payers can employ to minimise their exposure to medical inflation are complex and involve global trends, economic factors, and healthcare-specific dynamics.
As far as the outlook on healthcare pricing goes, there are a few trends that New Frontier Group has been monitoring, which we believe will continue to impact inflation into 2024:
- Global healthcare pricing trends – As of 2023, global healthcare costs were continuing to rise, influenced by tech advancements, an ageing global population, and increasing prevalence of chronic diseases. Additionally, healthcare spending in developing countries is increasing as these nations improve their healthcare infrastructure and services. In 2024, these trends are likely to continue, contributing to overall medical inflation worldwide.
- Technological advancement impact – While new medical technologies and treatments can lead to better health outcomes, they often come at a higher cost. Precision medicine, digital health tools, and advanced pharmaceuticals are examples of areas where we believe costs are likely to rise.
- Global health insurance market dynamics – The health insurance market is becoming increasingly globalised, with more players entering different regions. This expansion can lead to competitive pricing, but also brings challenges in standardising healthcare costs across different countries. Patients are increasingly demanding options for care and transparency in pricing.
- Economic factors influencing global healthcare costs – Economic instability, currency fluctuations, political unrest, war, and inflation in different countries can significantly impact healthcare costs. In 2024, economic recovery post-pandemic and the geopolitical climate will play crucial roles in shaping the global healthcare economics.
- Global health policies and regulations – Changes in health policies, such as efforts to control pharmaceutical pricing or introduce universal healthcare in more countries, could impact global healthcare costs. In emerging markets, where healthcare infrastructure is developing, costs can be unpredictable. Insurance payers need to understand these markets’ unique challenges and opportunities.
Minimising ongoing pressures
To minimise the impact of these ongoing pressures, there are several different tools payers can have in their toolkit. Some of the key strategies that we feel will be important for payers include:
- Diversification of provider networks – Building diverse network solutions of healthcare providers globally can help payers obtain better rates and manage costs more effectively. As reimbursement methods evolve across the globe, it is important to look at how different types of provider network models might fit the different populations a payer may have. There is no one-network-fits-all solution when it comes to international private medical insurance (IPMI), travellers and expats in different regions with different needs.
- Adoption of digital health solutions – Utilising telemedicine and digital health tools can reduce the need for more expensive in-person treatment and help manage minor health issues more cost-effectively. It is important to integrate digital with in-person care and be able to use a digital solution to support follow-up care and lower costs for both the patient and the payer.
- Innovation in healthcare financing – Exploring innovative healthcare financing models, like bundled payments, value-based care, or referenced-based pricing, can help international payers manage costs more effectively. In previous years these models were utilised more for local national care, but there are many ways they can be adapted to global programmes.
- Preventive healthcare initiatives – Investing in preventive healthcare can reduce the long-term costs associated with treating chronic diseases and other serious health conditions. While this may not be an effective strategy for a traveller population with a short-term policy, there are many things that can be incorporated into expatriate coverage that encourage ‘well visits’ (preventive health visits) to reduce the future need for acute onset emergency care.
- Data-driven cost management – Using data analytics to understand healthcare cost drivers and trends in different regions can help in developing more effective pricing strategies. With new artificial intelligence (AI) technology, we are better able to understand and pinpoint the potential for specific types of illness or injury based on an insured population in the demographic area where members are travelling or living. Being armed with the appropriate data can allow further negotiations with providers for custom solutions.
- Risk management strategies – Implementing robust risk management and underwriting and actuarial practices has long been the foundation to accurately pricing insurance products to reflect the healthcare cost risks. This type of strategy will always have a role in the development of pricing models and the determination of risk.
- Tiered coverage options – Offering different levels of coverage can help cater to a broader range of members and help manage exposure to high-cost healthcare services.
A positive outlook
Overall, we feel positive about the new solutions we see payers focusing on around global healthcare pricing in 2024. There is no question we will see continued cost increases influenced by technological advancements, demographic shifts and economic factors, but we work in an innovative industry that is always looking to support a competitive market.
International travel insurance payers can mitigate their exposure to these rising costs with provider network diversification, digital health adoption, preventive healthcare, data-driven cost management, local collaborations, risk management, tiered coverage, and staying abreast of global health policies and economic trends.
By adopting a proactive and multifaceted approach, payers will be better able to navigate the complex landscape of global healthcare costs.