News: APAC health care benefit cost increases expected to jump by 8.5% in 2021: Report

Compensation & Benefits

APAC health care benefit cost increases expected to jump by 8.5% in 2021: Report

The pandemic has greatly improved individual’s consciousness of personal healthcare awareness and hygiene. Is this leading to rising cost of health care benefits in APAC?
APAC health care benefit cost increases expected to jump by 8.5% in 2021: Report

Employer-sponsored health care benefit costs are expected to increase by 8.5 percent in Asia Pacific (APAC) in 2021 following a year in which the COVID-19 pandemic has had a significant impact on health care utilization and overall costs, according to a survey of medical insurers by Willis Towers Watson. The 2021 Global Medical Trends Survey, the largest of its kind, found that medical insurers in APAC project health care benefit costs will take a sudden drop in 2020 before rebounding to 8.5 percent in 2021, up from 6.2 percent this year and 7.5 percent in 2019.

Close to half of the insurers (49 percent) surveyed in APAC expect that medical cost increases will remain constant over the next three years while 40 percent expect costs will continue to increase.

“The pandemic undoubtedly had a major impact on slowing trend increases this year as it sparked a sharp decline in non-urgent surgeries and elective care,” said Cedric Luah, Head of Health & Benefits, Asia and Australasia at Willis Towers Watson.

“While most, but not all, countries experienced a lower cost growth this year, that is expected to be short-lived. In fact, we expect to see significant volatility of medical cost in 2021, given the state of the pandemic differs drastically from country to country and that may largely continue into next year. Other uncertainties as a result of COVID-19 will be whether or when a vaccine will become available next year, who pays for it and the extent of its availability, as well as how COVID-19 testing and treatment costs for 2021 will continue to be split between government, insurers and employers.”

According to the study, cancer (79 percent), cardiovascular diseases (76 percent), and conditions affecting musculoskeletal and connective tissue (42 percent) are the top three conditions currently affecting medical costs in APAC, with cancer and cardiovascular diseases expected to remain so in the near future.

Similar to last year, the most significant cost-driving factors based on health care providers’ feedback is the overuse of care by medical practitioners recommending too many services as cited by 75% percent of the respondents. Slightly more than half of the respondents (55 percent) saw insured members overusing care which placed this as the second condition pushing up costs.

When asked about the external factors that have driven up medical costs outside the control of employers and vendors, half of the respondents (52 percent) cited health care providers’ profit motives, followed by higher cost of medical technologies (49 percent) and epidemics and global pandemics (37 percent) as the top three leading drivers.

Further uncertainty around medical trend lies ahead as we start to see the true impact of delayed treatment in 2020 and the long-term effects on those who contracted COVID-19 in the region. Cedric addded, "Nevertheless, the pandemic has greatly improved individual’s consciousness of personal healthcare awareness and hygiene. It has also accelerated the adoption and use of telehealth, which could help to offset those potential higher costs and provide a more efficient way for those insureds to access and use health care in the future. However, that may also boost utilisation due to ease of access and add to overall costs."

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Topics: Compensation & Benefits

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