medical costs

These medical cost increases are said to be driven by an ageing population, overall declining health, poor lifestyle habits, and increased prevalence of chronic conditions.

Employer-provided medical benefit costs in Asia Pacific are forecasted to rise 8.2% in 2022, according to Aon's 2022 Global Medical Trend Rates Report.

It was said that the utilisation of medical plans has recovered from a low in April 2020, and is expected to exceed pre-COVID-19 pandemic levels in 2022 as "pandemic-related movement restrictions are further eased." This, added with inflation and an expectation that more of the cost of COVID-19 healthcare will transition to the private sector, is driving cost upwards.

Tim Dwyer, Head of Health Solutions, Asia Pacific, Aon, explained: "The pandemic caused overall lower utilisation levels in 2020, which provided plan sponsors with some respite. However, the dual effect of higher expected utilisation and inflationary pressures presents new cost challenges that need to be managed.

"The normalisation in utilisation patterns, emerging risks such as mental and musculoskeletal health and the potential for a greater COVID-19 cost burden to fall on the private sector will require employers to carefully analyse their medical plans as cost pressures increase over the next two renewal cycles."

Looking at other regions, costs are expected to increase the most in the Middle East & Africa, with average medical trend rates forecasted at 11.1%. While Europe is projected to see the lowest average medical premium rate increase, at 5.6%.

Diving specifically into the APAC region, the forecasted medical benefit costs growth from 2021 to 2022 for selected countries are as follows:

  • Singapore: 7% (2021) to 7% (2022)
  • Malaysia: 14.0% to 12.0% 
  • Hong Kong: 5.3% to 5.6%
  • India: 9% to 13%
  • Indonesia: 13.0% to 12.2%
  • Philippines: 8.0% to 8.0%
  • Thailand: 6.6% to 11.7%
  • Vietnam: 8.7% to 5.5%
  • Australia: 2.5% to 3.1%
  • China: 7.0% to 7.0%
  • Japan: 0.0% to 0.0%
  • South Korea: 7.5% to 8.0%

These numbers are said to be driven by an ageing population, overall declining health, poor lifestyle habits, and increased prevalence of chronic conditions. Cited from the report, "these continue to be global phenomena that are further exacerbated by the potential long-term health impacts of the deferred treatments and routine checks, that resulted from the multiple pandemic related lockdowns."

As such, employers will continue to face the prospect of added organisational costs and employee productivity losses, "unless the controllable factors contributing to these patterns are effectively addressed".

"This comes in addition to the growing need for a resilient workforce, a need exacerbated by the COVID-19 pandemic," the report added.


ALSO READ5 experiences that drive how satisfied employees are with their HR departments


Image / 123RF

Follow us on Telegram and on Instagram @humanresourcesonline for all the latest HR and manpower news from around the region!