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Press Release

Healthcare benefit costs in Asia Pacific projected to jump by 10.2% in 2023, WTW survey finds

Hong Kong healthcare cost increases expected to grow at 8.8% next year

October 26, 2022

Health and Benefits

HONG KONG, 26 October 2022 — Widespread inflation and increasing healthcare use are combining to drive projected increases in global healthcare benefit cost to their highest level in nearly 15 years, according to a survey of global medical insurers conducted by WTW, (NASDAQ: WTW), a leading global advisory, broking and solutions company. The survey found little relief in sight with close to three-quarters of insurers (73%) in Asia Pacific (APAC) anticipating higher or significantly higher increases over the next three years.

The 2023 Global Medical Trends Survey reveals that the healthcare benefit cost trend in APAC rose from an average of 6.2% in 2020 to 9.8% in 2021, then declined to 6.9% in 2022. For next year, it is projected that cost will rebound to 10.2% in 2023. The survey also disclosed sizeable variation in cost trend increases by markets. With various countries reopening up their borders after the lifting of COVID-19 restrictions this year, it is expected that healthcare utilisation and costs around the region will increase next year.

Global medical trends: Healthcare benefit cost growth in APAC, 2021-2023

Healthcare benefit cost growth in APAC, 2021-2023
  2021 2022 2023 projected
Global+ 8.2% 8.8% 10.0%
Asia Pacific 9.8% 6.9% 10.2%
Australia 16.0% -1.8% 8.3%
China 7.9% 8.2% 9.0%
HongKong 7.5% 8.2% 8.8%
India 8.3% 14.2% 8.6%
Indonesia 10.2% 11.5% 10.6%
Malaysia 6.8% 12.9% 13.8%
New Zealand 9.9% 2.7% 15.0%
Philippines 16.6% 13.0% 12.6%
Singapore 8.5% 9.6% 9.8%
SouthKorea 10.9% 11.3% 11.5%
Taiwan 6.1% 8.3% 7.8%
Thailand 7.4% 8.3% 7.9%
Vietnam 5.6% 9.0% 10.0%

+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 Latin America regional and global totals.

“Worldwide inflation and a rise in healthcare use in the wake of the pandemic are delivering a one-two punch on medical costs around the globe,” said Cedric Luah, Head of Health and Benefits International, WTW. “The bottom line is that these large increases are unsustainable. Employers and insurers will need to develop strategies and solutions to rein in costs to more manageable levels.”

Employers and insurers will need to develop strategies and solutions to rein in costs to more manageable levels.”

Cedric Luah | Head of Health and Benefits International, WTW

The leading driver of medical costs, according to insurers, continues to be overuse of care (81%) due to medical professionals recommending too many services or overprescribing. Insured members’ poor health habits (58%) is the second leading driver. The underuse of preventive services (46%) is also a significant cost driver and increased year-over-year due to, in part, the avoidance of medical care during the pandemic.

In addition, insurers in APAC identified cancer, cardiovascular and musculoskeletal as the top three conditions by cost, identical to last year’s findings. Cancer continues to be the leading condition in terms of incidence of claims and cost. Mental health conditions such as anxiety and depression continue to take a toll on employees. Insurers expect mental and behaviour disorders to be among the top five fastest-growing conditions by incidence of claims in this region in the next 18 months. Interestingly, insurers have also ranked treatments related reproductive system as one of the top five conditions that is affecting medical costs this year.

The pandemic has also highlighted health disparities among different employee groups, promoting employers to place a greater emphasis on diversity, equity and inclusion (DEI) in their healthcare strategy. “Exclusions persist for conditions in areas related to DEI, a key priority and board-level issue in many organisations. These exclusions range from fertility treatment, HIV/AIDS, treatments related to menopause and other mental and behavioural health including but not limited to Autism, ADHD and so on. Employers should consider how they can bridge these coverage gaps and help deliver more equitable health outcomes across different employee groups,” said Eva Liu, Head of Strategic Development, Health & Benefits, Asia and Australasia, WTW.

“Healthcare affordability remains top of mind for insurers, employers and employees. As we move into next year, we see a challenging year for employers in trying to balance the convergence of rising medical trend, salary pressures and the need to continue to make progress on DE&I initiatives globally, all while dealing with potential recessionary markets,” added Eva.

Medical trends in Hong Kong driving medical cost inflation

Insurers in Hong Kong are projecting a higher medical inflation in 2023 at 8.8% comparing to that of 2022 at 8.2%. This is mainly due to the gradual relaxation of social gathering restrictions within the community and quarantine requirement for travellers into Hong Kong. Most insurers predict that this would drive hospitalisation demand as delayed operations would resume. With the relaxation of quarantine requirements, more patients from mainland China could also start using the Hong Kong medical system again.

While general outpatient demand may remain steady during the pandemic as overall hygiene level improved, there is a trend of earlier detection of chronic illnesses leading to larger hospitalisation claims reported to insurers during the course of 2022. In the long run, viewed positively, this would improve the sustainability of insurance programmes although it has caused a spike in renewal terms due to less favourable loss ratios as a result of the higher frequency of relatively larger hospitalisation claims. Insurers are now trying to manage the rising medical cost through pre-authorisation requirements and promoting outpatient day surgery to reduce unnecessary inpatient costs.

About the survey

WTW conducted its 2023 Global Medical Trends Survey between July and September 2022. A total of 257 leading insurers representing 55 countries participated in the survey.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.

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