Published on November 16, 2023, 9:22 pm

Widespread inflation and increasing healthcare use are expected to drive global healthcare benefit costs to their highest level in nearly 15 years, according to the 2023 Global Medical Trends Survey. The 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. However, it is projected to rebound to 10.2% in 2023.

The survey also found that 73% of insurers in Asia Pacific (APAC) anticipate higher or significantly higher increases over the next three years. With various countries reopening their borders after the lifting of COVID-19 restrictions, it is expected that healthcare utilization and costs around the region will increase next year.

The leading driver of medical costs, according to insurers, is the overuse of care due to medical professionals recommending too many services or overprescribing (81%). Poor health habits of insured members (58%) are also a significant factor contributing to rising costs. Additionally, underuse of preventive services (46%) has increased year-over-year due in part to the avoidance of medical care during the pandemic.

Insurers in APAC identified cancer, cardiovascular diseases, and musculoskeletal conditions as the top three most expensive medical conditions by cost. Mental health conditions such as anxiety and depression are also taking a toll on employees, with insurers expecting them to be among the top five fastest-growing conditions by claim incidence within the region.

The pandemic has highlighted health disparities among different employee groups and has prompted employers to prioritize diversity, equity, and inclusion (DEI) in their healthcare strategy. However, exclusions for certain health conditions related to DEI persist, which poses a challenge for organizations aiming for equitable health outcomes across employee groups.

Singapore’s core and headline inflation figures continue to rise, with projected medical inflation reaching 9.8% in 2023. The country’s status as a medical tourism hub, coupled with the lifting of travel bans, has led to an influx of overseas patients seeking previously deferred elective treatment. The fast-aging workforce and a heavier burden of chronic diseases also contribute to rising healthcare costs in Singapore.

To address the unsustainable rise in medical costs, employers and insurers need to develop strategies and solutions to rein in costs and make them more manageable. This includes considering preventive care and well-being programs as core components of healthcare benefit programs. Employers are also urged to bridge coverage gaps related to DEI conditions and promote equitable health outcomes.

As we move into the next year, it is anticipated that employers will face challenges in balancing rising medical trends, salary pressures, progress on DEI initiatives, and potential recessionary markets. However, adopting a strategic and longer-term view can help organizations navigate these challenges effectively.

In conclusion, proactive measures are necessary to address the projected increases in global healthcare benefit costs. By understanding the leading drivers of medical costs, focusing on preventive care, promoting diversity and inclusion in healthcare strategies, and implementing innovative solutions, employers can mitigate the impact of rising healthcare costs on their organizations and employees’ well-being.

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