APAC employee healthcare costs to surge in 2019

How can HR better design the program to sustain the coveted benefit?

APAC employee healthcare costs to surge in 2019

The cost of employee health care benefits are expected to increase by 7.8% in Asia Pacific in 2019, according to a survey of medical insurers by Willis Towers Watson.

The cost change varies by country, with a few markets such as India, China and Malaysia expected to see an increase of more than 10%.

Insurers blame the high cost of medical technology and the overuse and overprescribing of services as the major cost-driving factors. They caution that soaring hospital/inpatient and pharmacy costs will become significant factors over the next five years.

The study also found that nearly half of insurers (47%) in Asia Pacific expect the outlook for medical cost 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, Luah suggested employers take a close look at how they design and deliver health care benefits.

When asked for the most significant cost-driving factors outside the control of employers and vendors, nearly two-thirds (60%) of the insurers cited the high cost of medical technology, followed by providers’ profit motives (37%).

Interestingly, eight in 10 insurers ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs upward. Just over half (53%) 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. 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 Asian countries.”

When it comes to medical conditions that cause the highest number of claims, insurers in Asia are seeing an increase in cancer and cardiovascular ailments. Almost a quarter of insurers also expect mental and behavioural disorders, for example stress, to be a top three condition over the next five years.

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