Advances in medicine – health insurance in distress
The increase in life expectancy over the last few centuries is due to medical advances as well as other factors. However, these positive developments in diagnostics and therapy have ultimately been accompanied by rising costs, which pose increasing problems for all healthcare systems.
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Technological innovations as driver of progress
As population and life expectancy continue to increase in most parts of the world, we can foresee a steady increase in demand for medical services and products as one of the global megatrends. Substantial progress could be observed in most areas of medicine over the last decades. Previous research focused on the development of new, but "traditional" drugs and medical devices. This has changed substantially over time. Nowadays, scientists look for "intelligent" drugs and devices, AI-supported computer systems, and a personalised therapy. New opportunities associated with "Health 4.0" grab the headlines.
Drivers and obstacles for life expectancy
Human life expectancy has increased steadily over several centuries and is still rising slightly in many countries. For the 21st century, it's still too early to make any sound predictions. On the one hand, there are factors that may further enhance life expectancy. Along with medical progress, this might be improved individual behaviour (e.g. smoking cessation, healthier nutrition) or better education. On the other hand, several environmental parameters will probably challenge any progress made. The most important factors are climate change (heatwaves, storms, flooding), pollution (air, soil, water) and infectious diseases (epidemics, pandemics).
Healthcare expenditures have risen steadily over the past decades. There are several contributing factors in this development.
The main drivers are:
- Increase in people with chronic diseases
- cardiovascular diseases (myocardial infarction, stroke)
- pulmonary diseases (COPD, asthma)
- neurological diseases (Alzheimer's disease, Parkinson's disease)
- psychiatric diseases (depression, psychosis)
- immunological diseases (rheumatoid arthritis, Crohn's disease)
- metabolic syndrome (hypertension, overweight, diabetes)
- Longevity, with associated need for long-term care
- Costs for healthcare staff
- Development of new drugs and medical devices
- Implementation of the concept of "personalised medicine"
- New approaches in genetic medicine
Further cost increases may destabilise healthcare systems
In particular, recent progress in genetic therapy (e.g. CAR T-cell therapy) presents a challenge for healthcare systems worldwide, as in the future therapies may be available that could cost more than USD 1 million per patient. Here, the question of financial feasibility arises directly, irrespective of the organisational form and insurance arrangements of the respective healthcare system.
Overall, a continuous increase in healthcare costs can be expected. Both claims frequency and claims severity will be affected. In some areas there may be a certain cost relief, but these savings will probably not be sufficient to offset the additional expenses elsewhere. Public and private insurers will therefore face an increase in claims costs in the short term. Their financial stability may be endangered in the end, as they may not be able to adjust their premiums arbitrarily when they are under state regulation and supervision.
Innovations in health insurance
Advances in medicine are driving innovation in insurance, from advanced risk assessment models to more personalised health insurance policies. At the same time, the (re)insurance industry is adapting to medical advances by using technologies such as wearable data and AI to improve efficiency or develop new insurance solutions.
Conclusion
Medical progress has contributed significantly to the increase in life expectancy. At the same time, it is now contributing to increasing cost pressure in all healthcare systems, which is putting health insurance companies under increasing pressure. On the insurance side, innovative solutions are needed to master this complex problem.