Asia-Pacific medical costs rising by more than 10%, survey finds

The 2012 Towers Watson Global Medical Trends Survey found that the cost of employee medical benefits in the region was expected to rise by 10.2 per cent this year, compared with 10.1 per cent in 2011.
In the Asia-Pacific region, India continues to show one of the highest cost-rise trends in the region at 13 per cent for 2012, while China expects rates at close to 10 per cent, driven by employee demand for private healthcare as well as the expanding private insurance landscape.
Even the more developed healthcare markets in the region are not immune to the rising cost of providing medical benefits: Both Singapore and Hong Kong are consistently experiencing rises of 8-9 per cent.
In Thailand, medical costs also continue to increase at 8-9 per cent year on year, said Chris Mayes, director of benefits consulting for Towers Watson Thailand.
“The key point to note is that this is much higher than general levels of salary increases, causing medical benefits to become a more significant spend-over time for companies operating in Thailand,” he said. “In the past, we have seen companies shopping around for cheaper insurance providers, but this is becoming increasingly difficult as insurers look more closely at prior claims ratios.”
Half of the respondents from Asia and the Pacific said they expected medical-benefit costs to increase over the next five years – compared with 41 per cent from Europe, and only 22 per cent for North America.
Dr Rajeshree Parekh, Asia-Pacific director of health and corporate wellness at Towers Watson, said: “The news is not all gloom and doom. Across all regions, we are seeing projections increase at a slower rate than in the recent past – perhaps evidence of the global economic slowdown.

TREND RATES TO CONTINUE RISING
“Even in Asia, although half of respondents expect trends to increase over the next five years, this has fallen from almost four in five in 2010. Nevertheless, with trend rates expected to continue rising, even if less quickly, employers will be compelled to look for innovative solutions to manage their medical costs. In particular, many will investigate how a strategy of holistic health promotion can help curb long-term costs effectively.”
As cost increases have remained somewhat constant, so have the top cost drivers. The three factors cited most often, which repeat from 2011, are new medical technology causing overuse of care (cited by 52 per cent of survey respondents), practitioners recommending too many services (50 per cent) and providers’ profit motives (31 per cent).
In terms of the top conditions that are driving claims, Asia-Pacific respondents cited cardiovascular |illness, gastrointestinal disease |and cancer/respiratory disease, which is in line with their global counterparts. Globally, almost three-quarters of respondents said that in five years, cancer would be a top claim driver.
Although the most popular methods of medical-cost management remain contracted provider networks and pre-approval for inpatient services (both cited by 57 per cent of respondents), some less traditional methods are receiving attention too. More than two in five (42 per cent) respondents reported using chronic-condition or disease-management tools, and more than one in four (29 per cent) are using wellness programmes.
“Employers are moving slowly but steadily towards an increased focus on wellness,” Parekh said. “In Asia in particular, wellness is a new space for employers, and they are moving cautiously. This is not surprising given universal challenges such as finding vendors that can provide wellness services on a global or regional basis, poor infrastructure and other inefficiencies.
“But these obstacles can be overcome with a commitment to organisational health promotion – a strategy that will not only enable employers to manage their costs, but also drive employee health, engagement and productivity over the long run.”
Mayes said: “At a recent seminar we held in Bangkok on ‘Employee Healthcare Strategies’, there was a lot of interest in how companies can encourage employee wellness to drive down medical costs in the long term rather than managing the cost of incurred claims. This is a relatively new concept for many Thai companies; however, if applied |correctly it can lead to controlled medical costs as well as enhanced employee engagement.”