Milliman recently conducted a comparison of 19 countries regarding medical inflation. We define medical inflation within a particular country as the rate of change in the health sector price index relative to the rate of change in the consumer price index (CPI). The study includes a qualitative review based on a questionnaire sent to representatives from Milliman offices worldwide, focused on the characteristics of private, commercially sold health insurance. The study also examines price index data collected from different countries, calculating medical inflation from 1995 to 2024. In most countries, health insurance is offered on a short-term basis—typically one year—with variable increases to insurance premiums on an annual basis.

Key findings:

• There is a downward trend in the relative rate of medical inflation compared with general inflation, driven by how the CPI increased at a faster rate on average between 2020 and 2024 than health-services price indices.
• Only three of the surveyed countries (Austria, Germany and Israel) offer long-term health insurance with very high or unlimited coverage, which exposes insurers in those countries to the greatest risk of medical inflation.
• Austria and Germany have a robust premium adjustment mechanism to mitigate this risk.
• Israel has the highest structural exposure to medical inflation in the sense that it only has a limited mechanism to adjust premiums, and health insurance contracts tend to be long-term with high benefit limits.
• Israel has a premium adjustment mechanism that has only been recently implemented and is significantly limited in effectiveness.
• In 11 countries (58%), private health insurance products are short-term, and in eight countries, private health insurance is long-term or includes both short- and long-term coverage.
• In 12 countries (63%), policy benefits are capped, whereas in seven countries, benefits are uncapped or very high.