HR teams in the Asia Pacific region are about to face a severe challenge in rising health care benefits costs.
According to the 2019 Global Medical Trends Survey, markets in the Asia Pacific will see an upward cost increase of 7.8 percent in 2019. India, China and Malaysia will see increases of more than 10 percent.
Meanwhile, medical costs are forecasted to show only modest increases.
Insurers in the survey blame the high cost of medical technology and the overuse and overprescribing of services as the major cost-driving factors. They also cautioned that soaring hospital/inpatient and pharmacy costs will become significant factors over the next five years, according to a press release.
The study also found that nearly half of insurers (47 percent) in the Asia Pacific expect the outlook for medical costs 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 health care costs continue to be a major issue, and are unsustainable over the long term," said Cedric Luah, Head of Health & Benefits, Asia and Australasia at Willis Towers Watson.
“To better control costs, many employers are taking a close look at how they design and deliver health care 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,” Luah added.
Interestingly, eight in 10 insurers (83 percent) ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behavior. Just over half (53 percent) cited overuse of care due to employees seeking inappropriate care.
“While cost management remains critically important, we expect more structural changes may be needed around how medical services are consumed and provided,” said Luah.
“In many markets, costs are driven by overuse of care, whether this is due to an increase in lifestyle-related chronic conditions (on the rise in both India and China). It can also be over-cautiousness of medical practitioners that result in unnecessary treatments or diagnostic procedures recommended by service providers as we are seeing in some Asia countries. There is also an issue of lack of access and delays in service which has impacted markets like India, Vietnam for instance,” said Luah.