Why is the cost of health insurance in the Americas increasing?
That the US is the most expensive country in the world to obtain health insurance, we knew for a long time. But did you know that the cost of health insurance in the Americas is on the rise? One of the key findings in Pacific Prime’s 2018 Cost of Health Insurance report suggests that the Americas has emerged as a dominant region in the top 20 most expensive locations for global medical insurance. Multiple countries from South, Central, and North America entered the ranking this year, beating all other continents in the number of countries ranked.
The cost of health insurance in the Americas
The table below showcases all 14 countries from the Americas that ranked in the top 20 most expensive locations for health insurance in 2018. Please note that some of the countries listed below have the same average premium this year, hence they have the same rank. Because of this, our list of the top 20 most expensive locations consists a total of 28 countries.
The Americas has emerged as a dominant region in the top 20 most expensive locations:
|Country||Rank||Average Cost (USD)|
|The United States||1||$23,120|
And while the three most expensive countries in our ranking are from the North American region, the difference between premiums in the US and the cost of health insurance in the Americas, in general, is very distinct. More specifically, plans sold in Canada are on average 55.2% cheaper than the ones sold in the US, premiums in Mexico are 60% cheaper, and international health insurance in the Dominican Republic is on average 65.2% less expensive.
5 factors behind the higher cost of health insurance in the Americas
When comparing the cost of health insurance in the Americas and other areas such as Asia and Europe, one question comes to mind: Why does the Americas have 14 countries featured in our top 20 ranking, while Asia Pacific has only five, followed by the Middle East with four, and Europe with only three locations? In the Cost of Health Insurance 2018 report, our team of insurance experts came to five conclusions that help explain the disproportions between insurance premiums in the Americas and other regions:
Higher costs of care in North America
The US: The factors shaping rising healthcare costs in the US remain the same as what we’ve discussed in our previous annual reports, namely:
1. A high prevalence of chronic diseases
2. High prices for medicine and medical technology
3. Disparate pricing for medical care
The cost of healthcare increased by 7% from 2017. This has had an impact on the insurance premiums consumers pay for plans in the US.
Canada: Surprisingly, Canada’s premiums have increased quite dramatically this year; the country has jumped from 6th most expensive in 2017 to 3rd in 2018. Not only has the average cost of healthcare increased by about 6% since last year, but another factor driving medical costs in Canada is the rising cost of medication.
Mexico: Insurance premiums in Mexico are considerably lower than premiums of plans sold in Canada and the US, but Mexico is on its way to catching up. Healthcare costs in Mexico are growing at a much faster level than the rates observed in its northern neighbors (the projected medical trend rate in Mexico for 2018 is 11.8%, compared to 6% in Canada, and 7% in the US).
Insurers grouping countries together
You might’ve noticed in our ranking table above that some countries share the same ranking. Four countries from Central and South America are in 12th place, and another six are in 18th place. One major explanation for this is that some insurers group countries with similar demographics and medical costs to streamline their underwriting process.
We also suspect that Canada’s sudden jump in our ranking is tied to the fact that insurers might be grouping Canada’s IPMI plans with the US ones, hence contributing to the increase in premiums there.
Increased demand for IPMI products
Our sales reports show that there is an increased demand for International Private Health Insurance plans in some South American countries. This is especially true for popular expat locations such as Mexico and Argentina. The increased demand and utilization of plans in the region contributed to the increase in premiums in the region.
Higher medical costs
On a global scale, the cost of healthcare is increasing and has been doing so on a consistent basis for a number of years. As mentioned earlier in this article, higher medical prices mean higher health insurance premiums, and such correlation is indissoluble. Our report suggested that the average medical inflation in Latin and Central America is about 13.8%, which makes it the 2nd highest medical inflation region in the world.
The way people use IPMI plans in these locations
Of course, the trend of Americans visiting other countries in the region to undergo affordable treatments persists. However, we have also noticed a new trend where affluent nationals of countries with ongoing political, economic, and social uncertainty issues (e.g., Venezuela), are opting for international health plans and seeking medical care outside of their home country.
The increased amount of IPMI plans sold, and the increased amount of claims needed to be paid out by the insurers also contributed to the rise in the cost of health insurance in the Americas in 2018.
Learn more by downloading the Cost of Health Insurance 2018 report!
While in this article we focused solely on the cost of health insurance in the Americas, and the drivers behind these costs, there is so much more to learn from this year’s edition of the Cost of Health Insurance report! Download it for free to learn more about the global trends that shape the medical insurance industry, and to make sure you are paying the market price for your IPMI plans.
Should you have any questions or need assistance in finding you, your family, and even your company a new medical insurance plan, contact us today for a chat. Our experienced insurance advisors will be able to assist you in choosing the right insurance for your needs and help to secure the best benefits and premiums on the market.