Employer-sponsored healthcare benefit costs are expected to increase by 8.5% in Asia Pacific in 2021 following a year in which the current pandemic has had a significant impact on healthcare utilisation and overall costs, said Willis Towers Watson recently.
According to the company’s 2021 Global Medical Trends Survey, medical insurers in APAC project that healthcare benefit costs will take a sudden slowdown in cost increase in 2020 before rebounding to 8.5% in 2021, up from 6.2% this year and 7.5% in 2019.
Markets including China (9.3%), India (10%), Indonesia (12%), Malaysia (12.5%), New Zealand (20%), Philippines (8.8%), Singapore (8.2%), Thailand (8%) and Vietnam (10.2%) will see an increase in excess of 8% next year, WTW pointed out.
Close to half of the insurers (49%) surveyed in APAC expect that medical cost increases will remain constant over the next three years while 40% expect costs will continue to increase, according to the company.
“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 a lower cost growth this year, that is expected to be short-lived, Luah noted.
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, he added.
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, he said.
- Cancer (79%), cardiovascular diseases (76%), and conditions affecting musculoskeletal and connective tissue (42%) are the top three conditions currently affecting medical costs in APAC, with cancer and cardiovascular diseases expected to remain so in the near future.
- Similar to last year, the most significant cost-driving factors based on healthcare providers’ feedback is the overuse of care by medical practitioners recommending too many services as cited by 75% of the respondents.
- 55% of respondents saw insured members overusing care which placed this as the second condition pushing up costs.
- When asked about the external factors that have driven up medical costs outside the control of employers and vendors, 52% of the respondents cited healthcare providers’ profit motives, followed by higher cost of medical technologies (49%) and epidemics and global pandemics (37%) as the top three leading drivers.