Employer-sponsored health care benefit costs are expected to grow at the same rate as last year in Asia Pacific at 7.1% in 2020, said Willis Towers Watson recently.
However, some markets including China, Hong Kong, India, Indonesia, Malaysia and Singapore will exceed the average expected increase at 9.8%, 8.3%, 12%, 11%, 12.6% and 9.3% respectively, the company pointed out..
In Asia Pacific, more than one-third (35%) of the insurers expect that medical cost will continue to increase in the next three years, according to WTW’s recently released 2020 Global Medical Trends Survey report.
“Controlling rising health care benefit costs remains a top priority for medical insurers and employers,” said Cedric Luah, Head of Health and Benefits, Asia and Australasia at 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.”
The recent and on-going healthcare emergency caused by the COVID-19 (the new coronavirus or the more common name Wuhan Pneumonia) also highlights the need to review how employers manage and deliver health care benefits, not only in normal times, but also during crisis period like this, according to WTW.
While the impact on medical cost is still unknown for now, it is expected that cost will escalate this year, Luah noted.
“The renewed interest on telemedicine, extended medical leave and so on will potentially have an impact on cost and expenditure too. Therefore, it is important take a closer look at the factors driving up costs, and work out the cost containment measures, as well as contingency plans, as the outbreak continues,” he observed.
Overuse of care
When asked for the most significant cost-driving factors based on employee and provider behaviour, almost nine in 10 respondents (86%) cited the overuse of care by medical practitioners recommending too many services as the leading driver, according to survey results.
At the same time 67% saw insured members overusing care which placed this as the second condition that pushed up costs, WTW said.
When asked about external factors (out of the control of both employees and providers), the high cost of new medical technology (71%), followed by providers’ profit motives (52%) once again emerged as the top two leading driver of medical costs, according to the survey Both figures represent an increase from last year (60% and 37% respectively).
The top two conditions by cost
Cancer (86%) and cardiovascular diseases (48%) will remain the top two conditions by cost and are expected to remain so in the near future, survey results indicate.
In addition, 60% of insurers are seeing an increase in incidences of gastrointestinal disorders.
Mental health: a “sleeper condition” where rates are quietly but steadily increasing
Mental health conditions are expected to become of the most significant cost factors over the next five years, according to survey results.
Two-thirds (66%) of insurers expect that behavioural and mental health conditions will become one of the most costly medical conditions and form the bulk of medical expenses other than hospital and inpatient care in the next five years, results indicate.
The potential impact of mental health conditions is getting the attention of insurers and employers all around the globe.
While many insurers in Asia Pacific expect mental health disorders to become more prevalent in the next three years, about 50% are currently excluding them from standard medical insurance policy, said Luah.
“Insurers in all regions are anticipating an increase in the demand for mental health services, and this will undoubtedly place upward pressure on costs and challenges to existing health care models. Employers should therefore move their focus beyond programmes to broader organisation factors that play a critical role in supporting mental and emotional wellbeing,” he noted.
