Asia Pacific Healthcare Costs Set to Increase in the Next 3 Years, Up by 8% in 2016

July 7, 20169:32 am477 views

Medical insurers project the cost of health care benefits in Asia Pacific to increase by 8% in 2016, an increase from 6% last year, and a trend that is expected to rise over the next three years, according to new research by leading global advisory, broking and solutions firm, Willis Towers Watson.

Of all the medical insurers surveyed in Asia Pacific about employee / provider behaviour, 72% expect medical costs to increase due to overuse of care owing to medical practitioners recommending too many services, 49% expect increases due to underuse of preventative services, and 43% expect increases due to overuse of care because of employees seeking inappropriate care.

Willis Towers Watson’s 2016 Global Medical Trends Survey draws on responses from 174 leading medical insurers, of which 45% are from Asia Pacific. With input from 55 countries, including 12 markets in Asia Pacific where the insurers have a representative market share, it tracks information about medical costs, what is driving them, and how they are being managed.

Looking at external factors driving medical costs, 81% of medical insurers surveyed in Asia Pacific say it is due to new medical technologies, 48% say it is owing to profit motives of providers, and 34% say it is due to changes in workforce demographics.

“Rising health costs can mean a significant drain on resources for employers,” said Dr Rajeshree Parekh, Director of Health and Corporate Wellness for Asia and Australasia at Willis Towers Watson. “Employers and vendors can mitigate the cost and overuse of services by making employees better consumers of health care — for instance, by encouraging prevention and considering the implementation of wellness programmes.”

Medical “No-Shows” a Problem in Asia

Interestingly, results from the recent Willis Towers Watson’s 2015/2016 Global Benefits Attitudes Survey indicate that forgoing health care could be a bigger issue than overuse of services. Over the long term, postponing care can result in more expensive and complex cases.

Of those surveyed, 56% of employees in Asia Pacific said they skip or change their medication, or delay or avoid a medical test or procedure prescribed by a doctor.

In Asia Pacific, the top three conditions (excluding maternity) leading to most claims are in line with the global trend: cardiovascular (61%), respiratory (57%) and cancer (54%). Diabetes is absent from the list although 60% of the world’s diabetic population is located in Asia. This could be due to the fact that diabetes cases are handled on an outpatient basis.

One-third of respondents in Asia Pacific said that accidents are a major contributor to costs. This is approximately double that of the global average, which is 17%.

Controlling Costs

In Asia Pacific, from a supply viewpoint, the most common cost-sharing approach for medical products is an annual limit on out-of-pocket expenses, premium cost-sharing by employees and an annual deductible. A deductible is the expense that needs to be paid out-of-pocket before the insurer will pay any expenses.

“Using coinsurance and deductibles as a plan design feature does more than just defray the amount of the deductible; it helps employees to become better consumers of health services if they must pay for a portion of their care. Coupled with direct education, these design features can be a powerful cost mitigation tool, and they’re being used by an increasing number of employers in Asia,” Dr Parekh added.

“Medical expenses can also be controlled from the demand side. Many leading employers are trying to establish a workplace culture of health by encouraging prevention and the promotion of healthy lifestyles. However, this approach requires employers to thoroughly understand their workforce’s health risks and design thoughtful benefit strategies that empower employees to find their own paths towards healthy living, along with their families and dependents.”

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