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Asia Pacific health care benefit cost increases expected to jump by 8.5% in 2021, Willis Towers Watson survey finds

Sharp rebound follows a slowdown in cost increases this year as COVID-19 affected care utilisation and overall costs

October 14, 2020

Health and Benefits

ASIA PACIFIC, 14 October 2020 — Employer-sponsored health care benefit costs are expected to increase by 8.5% in Asia Pacific (APAC) in 2021 following a year in which the COVID-19 pandemic has had a significant impact on health care utilisation and overall costs, according to a survey of medical insurers by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.

The 2021 Global Medical Trends Survey, the largest of its kind, found that medical insurers in APAC project health care benefit costs will take a sudden drop in 2020 before rebounding to 8.5% 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%) will see an increase in excess of 8% next year.

Global medical trends: Health care benefit cost growth, 2019 – 2021

+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.)
2019 2020 2021
Global+ 7.2% 5.9% 8.1%
Asia Pacific 7.5% 6.2% 8.5%
Australia 6.5% 6.0% 6.0%
China 8.7% 9.1% 9.3%
Hong Kong 8.2% 6.2% 6.7%
India 7.8% 12.0% 10.0%
Indonesia 10.3% 10.0% 12.0%
Malaysia 10.6% 10.8% 12.5%
New Zealand 5.6% -2.0% 20.0%
Philippines 7.7% 8.5% 8.8%
Singapore 7.7% 7.7% 8.2%
South Korea 7.0% 5.0% 4.0%
Sri Lanka 5.0% 5.0% 5.0%
Taiwan 4.0% 4.0% 4.0%
Thailand 7.0% 7.5% 8.0%
Vietnam 12.9% 10.1% 10.2%

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 cost will continue to increase.

“The pandemic undoubtedly had a major impact on slowing trend increases this year as it sparked a sharp decline in non-urgent surgeries and elective care,” said Cedric Luah, Head of Health & Benefits, Asia and Australasia at Willis Towers Watson.

“While most, but not all, countries experienced a lower cost growth this year, that is expected to be short-lived. In fact, 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. Other uncertainties as a result of COVID-19 will be whether or when a vaccine will become available next year, who pays for it and the extent of its availability, as well as how COVID-19 testing and treatment costs for 2021 will continue to be split between government, insurers and employers.”

According to the study, cancer (79%), cardiovascular diseases (76%), and conditions affecting musculoskeletal and connective tissue (42%) are the top three conditions currently affecting medical costs in APAC, with cancer and cardiovascular diseases expected to remain so in the near future.

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

“Further uncertainty around medical trend lies ahead as we start to see the true impact of delayed treatment in 2020 and the long-term effects on those who contracted COVID-19 in the region. Nevertheless, the pandemic has greatly improved individual’s consciousness of personal healthcare awareness and hygiene. It has also accelerated the adoption and use of telehealth, which could help to offset those potential higher costs and provide a more efficient way for those insureds to access and use health care in the future. However, that may also boost utilisation due to ease of access and add to overall costs,” added Cedric.

About the survey

The Willis Towers Watson 2021 Global Medical Trends Survey was conducted between July and September 2020 and reflects responses from 287 leading medical insurers operating in 76 countries.

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, optimise 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.

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