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Asia Pacific Health Care Benefit Costs Expected to Increase by 7.8% in 2019: SurveyProductivity Resource December 7, 2018
Employer-provided health care benefits costs are expected to increase by 7.8 percent in Asia Pacific in 2019, according to a survey of medical insurers by Willis Towers Watson, a leading global advisory, broking and solutions company. Although globally, medical costs are expected to show modest increases, this respite is not being shared by many markets in Asia.
The 2019 Global Medical Trends Survey, the largest of its kind in the industry, found that the projected medical trend varies significantly in the region by country. A few markets such as India, China and Malaysia will see an upward cost increase of more than 10 percent in 2019. Insurers blame the high cost of medical technology and the overuse and overprescribing of services as the major cost-driving factors, and caution that soaring hospital/inpatient and pharmacy costs will become significant factors over the next five years.
The study also found that nearly half of insurers (47 percent) in Asia Pacific expect the outlook for medical cost to be higher or significantly higher over the next three years.
Global & Asia Pacific medical trends: Health care benefit cost growth, 2017 – 2019
“While the regional average trend rate is moderate, the reality on the ground for many employers is that rising health care costs continue to be a major issue, and are unsustainable over the long term,” said Cedric Luah, Head of Health & Benefits, Asia and Australasia at Willis Towers Watson. “To better control costs, many employers are taking a close look at how they design and deliver health care benefits. There are also fundamental concerns over how medical treatment is being provided and consumed, and the cost implications of innovative future treatments, all of which can fuel sharp cost increases down the road.”
When asked for the most significant cost-driving factors outside the control of employers and vendors, nearly two-thirds (60 percent) of the insurers cited the high cost of medical technology, followed by providers’ profit motives (37 percent). Interestingly, eight in 10 insurers (83 percent) ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behavior. Just over half (53 percent) cited overuse of care due to employees seeking inappropriate care.
“While cost management remains critically important, we expect more structural changes may be needed around how medical services are consumed and provided,” said Luah. “In many markets, costs are driven by overuse of care, whether this is due to an increase in lifestyle-related chronic conditions (on the rise in both India and China). It can also be over-cautiousness of medical practitioners that result in unnecessary treatments or diagnostic procedures recommended by service providers as we are seeing in some Asia countries. There is also an issue of lack of access and delays in service which has impacted markets like India, Vietnam for instance.”
When it comes to medical conditions that cause the highest number of claims, insurers in Asia are seeing an increase in cancer and cardiovascular ailments. Almost a quarter of insurers also expect mental and behavioural disorders, e.g. stress, to be a top three condition over the next five years.
“We know from our research and client projects that insurers and employers are working to develop programmes that aim to stem rising medical costs and improve employee health. While traditional cost management programmes continue to be the main action taken, insurers and employers are also looking closely at telemedicine, second medical opinion services and other innovative design programmes that can help to control costs and meet the needs of their employees to help them make smarter health decisions,” said Luah.
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