New report reveals a 'persistent high trend' on medical costs in APAC
Employers in Asia Pacific are now facing the challenge of making healthcare benefit programmes more cost effective, following reports that medical care costs in the region would increase in the next three years.
The WTW Global Medical Trends Survey revealed that the average cost of medical care in APAC jumped to 9.9% in 2023 and would likely not decline based on 2024 projections.
More than half of insurers (59%) even said they are anticipating higher or significantly higher increases on medical costs over the subsequent three years.
"Faced with the prospect of higher cost increases over the next several years, employers need to focus their efforts on how to make their healthcare benefit programmes more cost effective," said Audrey Tan, head of Health & Benefits, Singapore, WTW, in a statement.
"This can range from conducting a review to determine if coverage is the right fit for their organisations to formulating a well-being strategy and ensuring wellbeing benefits are accessible to all employees."
According to Tan, understanding the factors driving the costs healthcare can help employers and insurers alike in developing strategies to combat the looming increase in medical costs.
The latest WTW Global Medical Trends Survey found that the 9.9% projected medical cost increase for 2024 is influenced by variations in markets around the region, with some showing little change, while others indicating slight increases of decreases.
The projected cost increase in the Philippines will hit 13.94%, according to the survey. Malaysia will also see an estimated 13.36%. Projected increases in other markets for 2024 include:
"While cost increases are projected to ease in 2024, they remain largely elevated in most markets in APAC, including Philippines, Malaysia, India, Indonesia, South Korea, Singapore, and Vietnam," said Eva Liu, head of strategic development, Health & Benefits, Asia Pacific, WTW, in a statement.
Insurers attributed the persistent high trend over numerous factors, including:
"The overuse or misuse of care due to medical practitioners recommending too many services and the high cost of new medical technologies, ranging from artificial intelligence-powered diagnostics tools to gene therapy, remain as the leading external factors driving the persistent high trend," Liu said.
Meanwhile, the survey also found that APAC is lagging when it comes to the coverage of certain mental health treatments in their medical insurance programmes.
"Generally, insurers or even employers here still lag behind global players in making changes to medical portfolios in 2023, from wellbeing services or adding other DEI features in their programmes," Tan said.
The exclusion of mental health treatments could be due to the "sociocultural stigmas" that exist in many APAC countries, according to Tan.
"However, these exclusions can significantly affect employee wellbeing and Diversity, Equity, and Inclusion efforts," she said.
Overall, cardiovascular diseases and cancer are the top two fastest-growing conditions by incidence of claims and costs in APAC.
