APAC health benefit costs to rise 8.5% next year – WTW

Employers should brace for higher costs following COVID-19 pandemic

APAC health benefit costs to rise 8.5% next year – WTW

Insurance News

By Gabriel Olano

Employer-sponsored health care benefit costs in the Asia-Pacific region are expected to increase by 8.5% next year, according to a survey of medical insurers carried out by Willis Towers Watson.

This follows a year in which the pandemic has had a significant impact on health care utilisation and overall costs.

In its 2021 Global Medical Trends Survey, the global broking giant found that medical insurers in Asia-Pacific project health care benefit costs will take a sudden drop in 2020 before rebounding to 8.5% in 2021, up from 6.2% this year and 7.5% in 2019.

Several markets are expected to see increases of 8% or above next year. These include China (9.3%), India (10%), Indonesia (12%), Malaysia (12.5%), New Zealand (20%), the Philippines (8.8%), Singapore (8.2%), Thailand (8%) and Vietnam (10.2%).

Roughly half (49%) of insurers surveyed expect that medical cost increases will remain constant over the next three years while 40% expect costs will continue to increase.

“The pandemic undoubtedly had a major impact on slowing trend increases this year as it sparked a sharp decline in non-urgent surgeries and elective care,” said Cedric Luah, head of health & benefits, Asia and Australasia at Willis Towers Watson.

“While most, but not all, countries experienced lower cost growth this year, that is expected to be short-lived. In fact, we expect to see significant volatility of medical cost in 2021, given the state of the pandemic differs drastically from country to country and that may largely continue into next year. Other uncertainties as a result of COVID-19 will be whether or when a vaccine will become available next year, who pays for it and the extent of its availability, as well as how COVID-19 testing and treatment costs for 2021 will continue to be split between government, insurers and employers.”

Furthermore, the study revealed that cancer (79%), cardiovascular diseases (76%), and conditions affecting musculoskeletal and connective tissue (42%) are the top three conditions currently affecting medical costs in the region, with the first two likely to remain so in the near future.

According to feedback from healthcare providers, the top cost-driving factor is the overuse of care by medical practitioners recommending too many services, as cited by 75% of the respondents. Slightly more than half of the respondents (55%) identified insured members overusing care, making it the second-highest cost driver.

As for the external factors causing medical costs to increase, the top three identified by respondents were: healthcare providers’ profit motives (52%), higher cost of medical technologies (49%) and epidemics and global pandemics (37%).

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