Employer-provided health care benefits costs are expected to increase by 7.8% in Asia Pacific in 2019, according to a survey of medical insurers by Willis Towers Watson, a 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 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% 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%) in the Asia Pacific expect the outlook for medical cost to be higher or significantly higher over the next three years.
“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.
When asked for the most significant cost-driving factors outside the control of employers and vendors, nearly two-thirds (60%) of the insurers cited the high cost of medical technology, followed by providers’ profit motives (37%). Interestingly, eight in 10 insurers (83%) 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%) 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 behavioral disorders, e.g. stress, to be a top three condition over the next five years.
The way forward
The rising health costs can mean a significant drain on resources for employers. However, employers can lessen the cost and overuse of services by making employees better healthcare consumers. Encouraging prevention and considering the execution of wellness programs can be a step towards this.
It is also important for leading employers to establish a workplace culture of health by encouraging healthy lifestyles. However, this requires employers to understand workforce’s health risks and come up with benefit strategies that empower employees to embrace healthy living.