Companies in the Asia Pacific region are set to spend more on medical insurance in the coming years, as the cost of healthcare benefits in the region is projected to increase by 8% in 2016, from 6% last year, according to a survey by Willis Towers Watson. This is a trend that is expected to continue over the next three years.
Conducted in October and November 2015, the survey drew on responses from 174 leading medical insurers, of which 45% are from the Asia Pacific. The study aimed to discover information about the drivers of medical costs and how these costs are managed. Information was gathered from respondents in 55 countries, including 12 markets in Asia Pacific where the insurers have a representative market share.
Survey findings around employee/provider behavior revealed that 72% of medical insurers expect medical costs to increase due to overuse of care, such as medical practitioners recommending too many services; 49% expect increases due to underuse of preventative services and 43% expect increases due to overuse of care.
Several external factors are driving medical costs up in the region. Eighty-one percent of medical insurers surveyed in the Asia Pacific said such factors include new medical technologies (81%), profit motives of providers (48%) and changes in workforce demographics (34%).
According to Cedric Luah, head of health and benefits, Asia and Australasia at Willis Towers Watson, profit motives of providers could refer to excessive referrals to specialists, requests for excessive diagnostics and unwarranted procedures.
This does not bode well for companies looking to control medical costs.
“Rising health costs can mean a significant drain on resources for employers,” says Dr Rajeshree Parekh, director of health and corporate wellesness for Asia and Australasia at Willis Towers Watson.
Reducing medical insurance costs
Cutting down on medical insurance costs could be a complex and challenging process, says Luah, adding that forgoing healthcare is not the answer.
Results from a separate Willis Towers Watson survey covering employees indicated that over time, postponing care could result in more expensive and complex cases.
According to the second survey, 56% of employees in Asia Pacific confessed to skipping or changing their medication, or delaying or avoiding prescribed medical tests or procedures.
“Not seeking appropriate care at the right time can also lead to a larger, long-term problem,” says Luah. “For example, ignoring a chronic cough could lead to an emergency room visit due to either a serious lung or heart condition. Poor management of chronic illness such as diabetes or high blood pressure may cause a heart attack.”
The top three conditions (excluding maternity) in the Asia Pacific which lead to the most claims are in line with global trends: cardiovascular (615), respiratory (57%) and cancer (54%). Absent from the list is diabetes, despite Asia being home to 60% of the world’s diabetic population.
Furthermore, a third of respondents in Asia Pacific attributed accidents as a major contributor to costs, a figure that is approximately double the global average of 17%.
Quick and short-term savings
According to Luah, quick and short-term savings for employers can be obtained in the form of smart purchasing decisions such as participation in package/portfolio rated products or facilities and the shifting or sharing of care costs with employees.
However, the only sustainable long term practice would be to reduce the total number of claims, as lower claims mean lower premiums, adds Luah.
“For this, every employee needs to be made accountable for his/her own health and also be empowered to make better decisions when using the healthcare system,” says Luah. “Organizations can help by encouraging employees to lead healthier lifestyles, improve their health literacy and be better consumers of healthcare so the system does not get abused.”
Making employees accountable consumers can create the best opportunities for reducing abuse of the healthcare system, says Luah, adding other strategies could include patient triage, decision support tools, gatekeeper models and pre-notification requirements.
“Manage of these control measures can be performed via working with a provider that can/will provide sufficient data insights for analysis and tracking,” says Luah.
Meanwhile, employers looking toward appropriate medical insurance products would do well to bear a number of factors into account.
Typical portfolio rate package products can provide a comprehensive level of coverage including typical in-patient hospitalization and out-patient clinical coverage, in addition to life and disability cover. The latter might not strictly fall under medical insurance but also constitute important risk elements, says Luah.
Employers could also include optional coverage for critical illness, dental, vision and maternity covers which can either be fully funded by the employer or co-funded by employees as a lower cost option. In the case of the latter, comprehensive coverage can be attained without too much increase in spending on the part of employers.