Employer-sponsored healthcare benefit costs are projected to grow at the same rate in 2020 as the last year in APAC region, according to a survey by Willis Towers Watson, a leading global advisory, broking and solutions company. At the same time, some markets are projected to exceed the 7.1 percent average increase. These countries include: China (9.8 percent), Hong Kong (8.3 percent), India (12 percent), Indonesia (11 percent), Malaysia (12.6 percent), and Singapore (9.3 percent).
Medical insurers on a global scale are expecting that healthcare benefit costs would continue to rise across the world. In the Asia Pacific region alone, more than one-third 35 percent of the insurers expect that medical costs would continue to rise over the next three years.
“Controlling rising healthcare benefit costs remains a top priority for medical insurers and employers,” said Cedric Luah, Head of Health and Benefits, Asia and Australisia, Willis Towers Watson. “Despite the regional variation in cost increases, they continue to outpace inflation and remain unsustainable, so neither insurers nor employers should be complacent.”
Almost nine in 10 respondents (86 percent) said that the overuse of care by medical practitioners recommending too many services as the primary factor that is hiking up the costs. About 67 percent of the respondents cited the overuse of care by insured members as another major reason behind driving up the costs of healthcare.
External factors such as rising cost of new medical technology (71 percent), insurance providers’ profit-oriented business model (52 percent), were brought up as the drivers of medical costs.
Mental health rates
In this rapidly transforming work environment where daily pressures of work are omnipresent, employees are facing mental health issues such as work-related anxiety. Two-thirds (66 percent) of the insurers predict that behavioral and mental health conditions will turn into becoming one of the most costly medical conditions and contribute to the bulk of medical expenses over the next five years.
Even though APAC insurers expect that mental health disorders will become more common in the next three years, at present, about 50 percent of the employers are excluding mental health coverage from the policy plans.
Preparing for outbreaks in the wake of coronavirus
“The recent and on-going healthcare emergency caused by the COVID-19 also highlights the need to review how employers manage and deliver healthcare benefits, not only in normal times, but also during crisis period like this,” said Cedric. “While the impact on medical cost is still unknown for now, it is expected that cost will escalate this year.”
Cedric also added that factors such as the rising interest in telemedicine, extended medical leave will all have an impact on cost and expenditure. It becomes crucial now more than ever to double-click on the factors that are driving up the costs, brainstorm and strategize on ways to minimize these costs and simultaneously put contingency plans in place in order to prepare for emergencies and outbreaks.
As medical costs continue to rise due to various external factors such as the cost of new technology, the need of the hour is for both employers and insurers to be aware of the changes and anticipate outbreaks and their impact on employees and the organization as a whole. Putting robust contingency plans in place to tackle outbreaks such as the recent coronavirus in addition to recognizing that mental health is an important component of an employee's wellbeing will ensure that the workforce is protected and healthier.