APAC health benefit costs to rise 8% in 2019, says WTW

Two most populous markets to be hit by double-digit jump in medical costs

APAC health benefit costs to rise 8% in 2019, says WTW

Insurance News

By Gabriel Olano

Employer-provided healthcare benefits costs are expected to increase by 7.8% in Asia-Pacific in 2019, a survey of medical insurers by Willis Towers Watson revealed.

While medical costs are expected to rise modestly across the globe, the global brokerage’s 2019 Global Medical Trends Survey found that Asian markets are likely to experience sharper increases.

Several markets, including India, China, and Malaysia, are projected to see cost increases of over 10% in 2019. Insurers in these markets blamed the high cost of medical technology and the overuse and overprescribing of services as the major factors driving the increase, and warned that soaring hospital/inpatient and pharmacy costs will become significant factors over the next five years.

Almost half (47%) of insurers in the region 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 healthcare costs continue to be a major issue, and are unsustainable over the long term,” said Cedric Luah, head of health & benefits for Asia and Australasia at Willis Towers Watson. “To better control costs, many employers are taking a close look at how they design and deliver healthcare 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.”

With regard to the most significant cost-driving factors outside the control of employers and vendors, six in 10 (60%) polled insurers cited the high cost of medical technology, followed by providers’ profit motives (37%). Interestingly, 83% of insurers identified overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behaviour. Just over half (53%) cited overuse of care due to employees seeking inappropriate care.

In addition, Luah raised the issue of lack of access and delays in service that are affecting developing nations such as India and Vietnam.

Non-communicable diseases, such as cancer and cardiovascular ailments, have led to the highest number of claims in the region, insurers said. Close to a quarter of insurers expect mental and behavioural disorders, including those linked to stress, to become a top three condition over the next five years.

“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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