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What Is Driving Up the Cost of Private Healthcare?

Home Blog What Is Driving Up the Cost of Private Healthcare?

David Cottrell

Underwriting & Product Manager

What is driving up the cost of global healthcare? Understanding these can help you keep a clear view of how healthcare is set to change in the coming years, especially if you are living or working abroad.

William Russell blog - costs of international healthcare - average increase infographic

Consumer demand

An emerging middle class in developing countries means there is an increasing global demand for high quality international health insurance.

The Brookings Institution report, The Unprecedented Expansion of the Global Middle Class, estimates that there were around 3.2 billion people in the middle class at the end of 2020, growing by around 140 million annually. This is set to increase to 170 million a year in five years’ time.

The overwhelming majority of the next billion – an estimated 88% – will live in Asia; with 380 million in India, 350 million in China and 210 million in other areas of Asia. Brookings predicts that by 2030, Asians could represent two-thirds of the global middle-class population.

The rise of the middle class has meant a general increase in wealth and life expectancy, which has created additional strain on governmental and private health services. Particularly in Asia, where high-fat diets and less active lifestyles have been associated with greater wealth and longer life expectancy, obesity levels are on the rise, leading to a surge in non-communicable chronic diseases, such as cardiovascular disease, some cancers and respiratory illnesses.

According to Iber Global, rates of cardiovascular disease are projected to at least double if not quadruple in several Asian countries over the next two to three decades.

“Cardiovascular disease, cancer and respiratory illness are all projected by insurers worldwide to be the top three diseases for at least the next five years.”

Willis Towers Watson’s 2020 Global Medical Trends Survey Report

Convenience, mobility and choice

What is driving up the cost of global healthcare? The digital revolution is also having an impact on consumer demands.  With the range of digital channels growing – from retail e.g. Amazon next day delivery, instant access to content e.g. Netflix, to instant means of communication e.g. social media, instant messaging – expectations on the healthcare industry for such things as 24/7 on-demand access to healthcare, are only going to increase.

The rising popularity of health-tracker apps and wearables (predicted to reach £14.8 billion in 2018) also means that patients are more connected to the state of their overall health and therefore expect their healthcare providers to match their levels of connectivity. Especially in the younger mobile-savvy ‘millennial’ generation, the need for convenience, mobility and choice are paramount.

Multi-pronged, collaborative and technology enabled approaches are one of the top considerations (and investment areas) for healthcare stakeholders.

Deloitte 2020 Global Healthcare Outlook

Ageing and lifestyle factors what else is driving up the cost of global healthcare?

The world’s population is ageing. This means that, as poverty decreases and access to medicines improve, life expectancies are increasing. According to Deloitte’s 2020 global healthcare sector outlook, the ageing population (those over 65 years old) is set to increase by eight percent, from 559 million in 2015 to 604 million in 2020.

The longer people live, the more care they may need, and the more chance they will have of contracting later life conditions and diseases, such as dementia. According to Deloitte, cases of dementia are forecast to increase in every region of the world, reaching 74.7 million by 2030.

William Russell blog - What is driving up the cost of global healthcare infographic about increase in people

Regulatory landscape and fraud

The global healthcare regulatory landscape is complex and constantly evolving. In the future, healthcare providers will continue to face a highly complex and rapidly changing set of global, regional, country and industry-specific regulations, laws and directives.

These cover clinical quality and safety, regulations on counterfeit drugs, identifying and eliminating corruption, and the ever-increasing danger of cyber security.

Many regulations are in place to counteract the global problems of fraud and corruption in healthcare. The Global Health Care Anti-Fraud Network estimates that $260 billion – or around six percent of global healthcare spending – is lost to fraud each year, which can occur in several ways.

Health insurance fraud, whereby an insurer or government healthcare programme is targeted by a fake claimant, is a growing problem, while prescription drug diversion is anticipated to become more of a global problem than illicit drug production.

Tackling fraud and adhering to regulations all come with a price tag. Expensive security software must be purchased to protect confidential patient information from hackers. Healthcare costs must therefore rise to ensure data and patients are kept safe.

New healthcare approaches

According to McKinsey’s Digital Patient Survey, more than 75% of all patients expect to use digital services in the future. This means health services will have to embrace a ‘third wave of digitisation’, meaning using digital innovations to improve patient accessibility and experience, rather than just using it to consolidate HR and internal IT processes.

This third wave of digitisation covers an array of new technology: 3D-printed devices, the use of virtual reality and telehealth to communicate with patients, biosensors and trackers, and artificial intelligence in clinical diagnoses.

The emergence of new innovative approaches to healthcare and improved online services is certainly a way for traditional healthcare providers to meet increasing patient demands, but setting up these services comes with a cost.

In Southeast Asia, Singapore is leading the way with integration of its digital healthcare services by moving its national health information to the cloud. According to PwC Consulting, the project – named hCloud – will cost US$37 million for the first ten years.

“Singaporeans are among the most tech-savvy in the world, and that translates into their attitudes towards digital healthcare – it is not just the younger generation who are keen to adopt digital healthcare.”

Ivy Lai, country manager, Philips Singapore

Writing for Forbes, Maria Clemens of health sector technology provider, Management and Network Services, said that technological advances had been serving the healthcare industry very well over the last few decades, but the cost of some technical advances was now contributing to the overall increase in costs. “In fact, new medical tech is responsible for 40-50% in annual cost increases,” she wrote.

William Russell blog - What is driving up the cost of global healthcare - Infographic increase in costs due to medical technology

How does this all impact my health insurance?

As global healthcare costs go up, this increases how much it costs to provide health cover. However, if you are renewing your health insurance for 2020, there are a few options you can consider.

  1. Shop around and compare your options for the most competitive deal, making sure your policy meets your needs and consider the fact that pre-existing conditions may not be covered. See how William Russell is calculating your insurance premiums. 
  2. Stay with your current insurer, but check your policy meets your needs and provides access to the best health cover.
  3. You may be able to change the level of your cover, for example, the level of plan, optional benefits or excess levels. Talk to your insurer to find out more about your level of cover.


William Russell is a trading name of William Russell Ltd, which is authorised and regulated in the UK by the Financial Conduct Authority, and William Russell Europe SRL, which is registered in Belgium with the Financial Services & Markets Authority. We provide insurance plans on behalf of AWP Health & Life SA, an Allianz group company registered in France, and AWP P&C SA UK, an Allianz group company registered in the UK. We’re here to help our customers, but we don’t offer insurance advice.