Rising health care benefit costs show no sign of abating in Asia Pacific
The cost of employer-provided health care benefits in Asia Pacific continues to climb with little relief in sight, according to a survey of medical insurers by Willis Towers Watson, a leading global advisory, broking and solutions company. Insurers attribute the bulk of the cost increase to advanced medical technology, and the overuse and overprescribing of services.
The 2017 Willis Towers Watson Global Medical Trends Survey found that medical insurers in Asia Pacific are projecting the gross cost of health care benefits to rise 8.6% this year. Globally, the projected increase is 7.8%. In the region, India (20.0%), Indonesia (11.0%) and Malaysia (15.0%) are leading the upward cost trend, followed by Mainland China (10.3%), Hong Kong (9.6%) and the Philippines (9.6%). Furthermore, the outlook for reining in costs in the near term is not optimistic. Half of all insurers in Asia Pacific expect higher or significantly higher medical trend costs over the next three years.
When asked what are the most significant cost-driving factors outside the control of employers and vendors, almost three-quarters (71%) cited the high cost of medical technology, followed by providers’ profit motives (47%). Nearly three-quarters of insurers (73%) ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behaviour. Almost half (46%) cited overuse of care due to employees seeking inappropriate care.
“Controlling rising medical costs is without question a top priority for insurers and employers in the region. In Asia, employers have to deal with many factors that contribute to this cost over and above global drivers — for instance, medical tourism or an unregulated private medical sector,” said Cedric Luah, Head of Health & Benefits, Asia and Australasia at Willis Towers Watson. “While progress is being made to stem costs, the vast majority of respondents continue to grapple with how to rein them in. It’s not for a lack of effort or innovation that this continues to be a struggle.”
Managing the medical trend
More employers are implementing both traditional and innovative approaches to manage rising costs. According to the survey, requiring pre-approval for scheduled inpatient services, placing limits on certain medical services and using contracted networks of providers are cited as the most effective tools to help manage costs. Interestingly, in Asia Pacific, alternative cash allowances (for using public facilities rather than private care) are perceived as significantly more likely to be effective. Tools such as stop loss insurance and coverage for catastrophic claims are seen as less effective than in other regions.
“To understand — and try to rein in — medical costs, employers should understand what drives them, and then think about solutions,” said Chris Mayes, Head, Advisory Services and Solutions, Health & Benefits, Asia and Australasia at Willis Towers Watson. “Part of this will be considering how benefits are designed and delivered. For instance, by putting into place limits on services or pre-approvals, insurers are attempting to bring back greater control and minimise the unpredictability of cost. It’s encouraging that the top cost management methods that are seen as effective do in fact address what is driving costs.
It’s therefore important that employers continue to push their insurance partners to provide such elements of design and delivery in their medical benefits.” Health promotion programmes are also gaining traction. Nearly two in three respondents (65%) now offer (either directly or through a partner) personal health risk assessments with another 10% planning to do so next year. Second medical opinions are offered by 49% with another 18% planning to do so. Notably, almost six in 10 (57%) insurers offer lifestyle and health education programmes, and these are expected to grow to nearly 79% next year.
“Wellness programmes can provide another piece of the puzzle by promoting behaviour change. They not only hold great promise for addressing non-communicable diseases, they can also address ones that arise from lifestyle choices impacting Asian employees such as smoking, poor eating habits and lack of regular exercise,” said Luah. “While respondents’ health promotion programmes continue to grow in Asia Pacific, we believe insurers can work more closely with employers to better understand employee population health risks and employees’ preferred ways of using them, while providing enhanced metrics and standardised reporting.”
The 2017 Willis Towers Watson Global Medical Trends Survey was conducted between October and November 2016, and reflects responses from 231 leading medical insurers operating in 79 countries, including 50 insurers from 14 countries in Asia Pacific.
Source: Media Release
