, Singapore

APAC's healthcare benefit costs to rise 8.5% in 2021

A fall in elective surgeries in 2020 slowed the upward trends in costs.

Employer-sponsored healthcare benefit costs are expected to rise 8.5% in Asia Pacific (APAC) in 2021 as the pandemic caused an impact on health care utilisation and overall costs, according to a survey by Willis Towers Watson.

The survey found that medical insurers in the region are expecting health care benefit costs will take a sudden drop in 2020 before rebounding in 2021, up from 6.2% this year and 7.5% in 2019.

Markets including 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%) are expected to see an increase in excess of 8% next year.

Close to half (49%) also expect that medical cost increases will remain constant over the next three years, whilst 40% expect cost to continue rising.

The pandemic sparked a sharp decline in non-urgent surgeries and elective care, which casued an impact on slowing trend increases in 2020, explained Cedric Luah, Willis Towers Watson's head of health & benefits, Asia and Australasia.

“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,” Luah said.

Luah also cited pandemic uncertainties such as the date when a vaccine will become available, who pays for it and the extent of its availability, as well as how testing and treatment costs for 2021 will continue to be split between government, insurers, and employers.

Cancer (79%), cardiovascular diseases (76%), and musculoskeletal and connective tissue conditions (42%) are the top three conditions affecting medical costs in APAC.

Similar to last year, the most significant cost-driving factors cited based on health care providers’ feedback was the overuse of care by medical practitioners recommending too many services as cited by 75% of the respondents.

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 health care providers’ profit motives, followed by higher cost of medical technologies (49%) and epidemics and pandemics (37%) as the top three leading drivers.

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