Why employers across Asia need to develop sustainable wellbeing programs
Medical plan costs paid by employers around the world are set to rise nearly 8 percent in 2019, far outpacing average general inflation of nearly 3 percent, according to the 2019 Global Medical Trend Rates Report released on World Diabetes Day by Aon plc, a global professional services firm. The expected average increase before plan changes in medical and pharmacy cost for employer-sponsored medical plans in 2019 of 7.8 percent is slightly lower than the 8.4 percent in 2018 due to employer cost containment measures, tighter procurement of medical goods, new health improvement initiatives and lower rates of projected inflation worldwide.
This makes it important for employers to not only focus on cost containment; instead, employers across Asia should develop sustainable wellbeing programs.
Medical trend rate in Asia Pacific will decrease from 8.9 percent in 2018 to 8.6 percent in 2019. This rate is higher in Singapore at 10 percent and is expected to remain the same in 2019 – despite a lower projected general inflation of just 1 percent. On the other hand, medical inflation in Hong Kong is expected to rise from 6.2 percent in 2018 to 8.3 percent in 2019.
In China, medical trend rate will increase from 5.5 percent in 2018 to 6 percent in 2019. Medical trend rate in India is at 9 percent and is expected to remain the same in 2019. Insurers there are now required to set premium rates based on portfolio claim experience and avoid artificially low fees for competitive advantage.
Medical conditions driving medical plan costs
In Singapore, cancer and cardiovascular issues are the top medical conditions driving up medical plan costs – while increasing levels of stress and respiratory infections are core contributors to rising costs in Hong Kong. To minimize these costs, organizations continue to introduce design measures such as co-payment, dollar limits in plan, limiting certain benefits, and referring employees to cost-effective providers.
According to Tim Dwyer, CEO, Health Solutions, Asia Pacific, Aon, says “by focusing only on cost containment, companies are treating the symptoms instead of the underlying causes in relation to the health of their employees. Against the backdrop of an aging workforce and increasing prevalence of sedentary lifestyles, the time is right for employers across Asia to develop sustainable wellbeing programs. This will increase employee engagement, lead to a healthier and more productive workforce and, ultimately, improve business performance.”
Projected medical trend rates vary significantly by region. Countries in the Middle East/Africa and Latin America regions will experience the highest average medical premium rates of any region at 13.7 percent and 13.2 percent respectively.
The cost escalation to continue
“While the 2019 medical trend rates are at their lowest compared to prior years, these are still extremely high. We expect continued cost escalation due to global population ageing, poor lifestyle habits in emerging countries, cost shifting from social health care programs and the increased prevalence and utilization of employer-sponsored health plans in many countries,” said Wil Gaitan, senior vice president and global consulting actuary at Aon.
Aon's report confirmed the increasing impact of non-communicable diseases on health care costs worldwide. The report also confirms the growing prevalence of risks from unhealthy personal habits around the world, such as high blood pressure, high cholesterol, physical inactivity, bad nutrition, and obesity.