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Health care benefit costs projected to increase by 7.1% in Asia Pacific in 2020, says Willis Towers Watson

Mental and behavioral disorders will be a significant cost factor over next five years

Health and Benefits
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February 24, 2020

SINGAPORE, 24 February 2020 — Employer-sponsored health care benefit costs are expected to grow at the same rate as last year in Asia Pacific at 7.1% in 2020, according to a survey of medical insurers by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company. However, some markets including China, Hong Kong, India, Indonesia, Malaysia and Singapore will exceed the average expected increase at 9.8%, 8.3%, 12%, 11%, 12.6% and 9.3% respectively.

The 2020 Global Medical Trends Survey, the largest of its kind in the industry, found medical insurers globally are projecting health care benefit costs to continue to rise across the world this year. In Asia Pacific, over one-third (35%) of the insurers expect that medical cost will continue to increase in the next three years.

Global medical trends: Health care benefit cost growth, 2018 – 2020
2018 2019 2020*
Global+ 6.5% 6.7% 6.8%
Asia Pacific 6.8% 7.1% 7.1%
Australia 3.4% 3.7% 3.2%
China 9.2% 10.1% 9.8%
Hong Kong 7.5% 8.2% 8.3%
India 11.0% 11.3% 12.0%
Indonesia 9.0% 9.8% 11.0%
Malaysia 11.9% 11.6% 12.6%
New Zealand 7.0% 7.5% 6.0%
Philippines 5.3% 7.9% 8.2%
Singapore 8.8% 8.3% 9.3%
South Korea 3.8% 4.0% 4.0%
Taiwan 6.0% 6.1% 6.3%
Thailand 8.1% 9.0% 9.2%
Vietnam 9.7% 10.9% 12.1%

*Projected
+Global numbers exclude Venezuela

“Controlling rising health care benefit costs remains a top priority for medical insurers and employers. Despite the regional variation in cost increases, they continue to outpace inflation and remain unsustainable, so neither insurers nor employers should be complacent,” said Cedric Luah, Head of Health and Benefits, Asia and Australasia at Willis Towers Watson. “

“The recent and on-going healthcare emergency caused by the COVID-19 also highlights the need to review how employers manage and deliver health care benefits, not only in normal times, but also during crisis period like this. While the impact on medical cost is still unknown for now, it is expected that cost will escalate this year. The renewed interest on telemedicine, extended medical leave and so on will potentially have an impact on cost and expenditure too. Therefore, it is important take a closer look at the factors driving up costs, and work out the cost containment measures, as well as contingency plans, as the outbreak continues,” added Cedric.

When asked for the most significant cost-driving factors based on employee and provider behaviour, almost nine in 10 respondents (86%) cited the overuse of care by medical practitioners recommending too many services as the leading driver. At the same time 67% saw insured members overusing care which placed this as the second condition that pushed up costs. When asked about external factors (out of the control of both employees and providers), the high cost of new medical technology (71%), followed by providers’ profit motives (52%) once again emerged as the top two leading driver of medical costs. Both figures represent an increase from last year (60% and 37% respectively).

According to the survey, cancer (86%) and cardiovascular diseases (48%) will remain the top two conditions by cost and are expected to remain so in the near future. In addition, 60% of insurers are seeing an increase in incidences of gastrointestinal disorders.

Mental health, a “sleeper condition” where rates are quietly but steadily increasing

The survey also found mental health conditions are expected to become of the most significant cost factors over the next five years. Two-thirds (66%) of insurers expect that behavioural and mental health conditions will become one of the most costly medical conditions and form the bulk of medical expenses other than hospital and inpatient care in the next five years.

The potential impact of mental health conditions is getting the attention of insurers and employers all around the globe. While many insurers in Asia Pacific expect mental health disorders to become more prevalent in the next three years, about 50% are currently excluding them from standard medical insurance policy.

“Insurers in all regions are anticipating an increase in the demand for mental health services, and this will undoubtedly place upward pressure on costs and challenges to existing health care models. Employers should therefore move their focus beyond programmes to broader organisation factors that play a critical role in supporting mental and emotional wellbeing,” said Cedric.

About the survey

The Willis Towers Watson 2020 Global Medical Trends Survey was conducted between July and September 2019 and reflects responses from 296 leading medical insurers operating in 79 countries. It tracks information about medical costs, what is driving them and how they are being managed, as provided by leading global insurers.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

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