How healthcare benefit costs are expected to increase in 2021: Data from across Asia

China (9.3%), India (10%), Indonesia (12%), Malaysia (12.5%), New Zealand (20%), Philippines (8.8%), Singapore (8.2%), Thailand (8%) and Vietnam (10.2%) may see an increase in excess of 8% this year.

Per Willis Towers Watson data, employer-sponsored healthcare benefit costs are expected to increase by 8.5% in Asia Pacific (APAC) in 2021.

As such, China (9.3%), India (10%), Indonesia (12%), Malaysia (12.5%), New Zealand (20%), Philippines (8.8%), Singapore (8.2%), Thailand (8%) and Vietnam (10.2%) may see an increase in excess of 8% this year, according to the 2021 Global Medical Trends Survey.

Global medical trends: Healthcare benefit cost growth, 2019 – 2021 (please refer to the image at the top) *+Global and regional trend rates are weighted based on GDP per capita. (Due to the hyperinflationary nature of the Venezuelan economy, Venezuela has been excluded from global totals.)

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

According to the study, the top three conditions currently affecting medical costs in APAC are:

1. Cancer (79%),
2. Cardiovascular diseases (76%),
3. Conditions affecting musculoskeletal and connective tissue (42%) 

Similar to last year, the most significant cost-driving factors (based on healthcare providers’ feedback) is the overuse of care by medical practitioners recommending too many services, cited by 75% of the respondents. Slightly more than half of the respondents (55%) saw insured members overusing care, placing 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%) cited healthcare providers’ profit motives, followed by higher cost of medical technologies (49%) and epidemics and global pandemics (37%).

Provided below is the country- or state-wide data on the projected medical trends rate and cost increases for 2021. 

China: Costs of medical care continue to increase for treatments

COVID-19 has not had as much impact on cost or utilisation in China as it has in other countries. The costs of medical care continue to increase for treatments, particularly those outside the scope of social security coverage.

The central government is planning to eliminate the individual medical account and at the same time offer coverage for outpatient expenses under social security. This is expected to impact the cost of treatment in the future; however, it will probably take a while for the initiative to be fully implemented.

Hong Kong: Low utilisation of medical services during the pandemic

The low utilisation of medical services during the pandemic and the recession forecasted by the government are the two main drivers of the slowdown in medical trend for 2020 and 2021. Demand for medical tourism from mainland China has also dropped due to the travel restrictions and social unrest in Hong Kong.

India: Low claim frequency and average cost of procedures increasing

India has not seen the same reduction in trend as other countries have for 2020. While utilisation decreased during April to July 2020, India is currently in a situation with low claim frequency and average cost of procedures increasing (due to the cost impact of COVID-19 precautions on non-COVID-19 claims).

At the same time, the treatment and pricing protocol of medical care is not regulated in India, and hospital billing practices continue to pose a challenge. The government did, however, take some small measures to issue guidelines around pricing for COVID-19 tests and treatments.

The year 2021 could see an increased rate of trend, higher than provisionally reported, as utilisation starts to return to normal levels; however, we also may see an increased awareness in the areas of prevention and wellbeing, and a rising trend in favour of home care rather than immediate hospitalisation for medical treatments, which could help mitigate a larger potential increase.

Indonesia: Increased utilisation of BPJS Kesehatan

Medical trend rates in Indonesia are projected to be slightly lower, not only because of the impact of COVID-19 on reduced elective procedures but also due to other factors, such as the increased utilisation of BPJS Kesehatan (universal health insurance) especially for chronic/critical illnesses and ongoing costly treatments.

This allows insurers to split their risk with the government and will help stabilise future medical trend rates. The BPJS Kesehatan also provides coverage of all medical treatments related to COVID-19, which helps to stabilise the trend rates despite the expected continued demand for private healthcare.

Malaysia: 2021 may signal a catch up on delayed elective procedures

Medical trends in Malaysia are expected to continue rising albeit at a slower pace compared with previous years. For 2020, the number of doctor visits and admissions dropped significantly during the government-imposed lockdown (MCO), which has caused the overall trend to decrease. During this period, many elective surgeries were postponed.

For outpatient care, there has been a big drop in specialist care visits; at the primary care level, there has been a drop in less acute visits, with patients turning to telemedicine. For patients with chronic conditions, the level of visits has been largely maintained, as these are generally “unavoidable.” All of this means that there is a pause in 2020 trend compared with 2019, but an uptick is expected in Q4 2020 and in 2021 to catch up on delayed procedures.

Philippines: Average amounts per inpatient and outpatient claims are rising

Private medical care in the Philippines is largely dominated by an HMO model, which accounts for 80% of plans. While the frequency of inpatient and outpatient claims has definitely decreased in 2020, the average amounts per inpatient and outpatient claims are rising.

In addition, various physician organisations negotiated with HMO associations and were granted a 50% increase in fees commencing May 27, 2020, ostensibly to cover the cost of PPE. This cost increase is expected to remain in place for the duration of the pandemic. Physician fees are roughly 30% of total spend.

Overall this helps explain why trend rates in the Philippines have edged up for 2020 to 8.5% from 7.8% in 2019 and are projected to continue increasing for 2021, although continued delay in treatment in 2020 could mean an even larger increase in 2021 than projected.

Singapore: Quality telehealth has become one of the key priorities

Insurers have taken quite a conservative view on medical inflation for 2020 and 2021, mainly due to delayed elective surgical procedures and an employer focus on mental health, wellbeing and virtual solutions. Overall trend is still hovering in the 7% to 8% range for 2020 and 2021.

Wellbeing solutions include ensuring employees are able to work effectively from home, and quality telehealth has become one of the key priorities that employers are keen to introduce to their work-from-home employees. Some medical providers are offering home health screenings and vaccinations to employees as well as their dependents.

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