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Expect to pay S$1,973 in medical costs per employee by 2030



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Faced with a rapidly ageing population and increased medical cost, it is a must for employers in Singapore to relook at their healthcare strategies.

According to the latest report by Mercer together with Marsh & McLennan Companies’ Asia Pacific Risk Center (APRC), the segment of Singapore employees aged over 50 is projected to increase by 55%, and to represent 40% of the workforce by 2030.

This is likely to present a mounting financial burden for employers for employers as Mercer’s analysis has shown that older employees tend to have a significantly higher rate of healthcare utilisation.

In fact, the report, titled “Aging Workforce: Cost and Productivity Challenges of Ill Health in Singapore”, pointed out that as employees age, they require more inpatient hospitalisation (from 2.4% in those aged 20-29, to 34% in those aged 60 or older), more general practitioner visits (from slightly under 60% in those aged 20-29, to almost 90% in those aged 60 and above), and more specialist visits (from 10% in 20-29 year-olds, to 53% in those 60 or older).

 

This increase in demand and utilisation medical services will see the aging demographic contributing to 41% of the escalation in medical costs. To make things worse, together with inflation, this increase in demand and utilisation will result in a surge of overall costs.

The report highlighted that the aging workforce and medical cost inflation in Singapore are projected to drive up average medical costs per employee by 108% to S$1,973 per year in 2030, representing a mounting financial burden for employers.

What is worth noting is the top 10% of claimants attribute to 60% of all medical claim costs. This highlights the value of interventions for high-risk groups, such as health and wellness programs to reduce the incidence of disease, and screening for earlier detection of disease.

ALSO READ: Insurance premiums may go up by 85% in Singapore by 2030

Apart from increase in medical costs, societal aging is also likely to contribute to challenges such as productivity growth through increasing rates of absenteeism and presenteeism.

In Singapore, societal aging is estimated to drive the prevalence of chronic diseases such as cancer and diabetes by up to 200% by 2030.

Mercer aging workforce report (exhibit11)

 

Looking at current trends, Mercer’s report projected a 25% increase of productivity loss due to sickness absenteeism per employee based on GNI (gross national income). With an aging workforce, this represents a cost of S$3.3 billion in 2030 at the national level – a 43% increase from 2016. The research also found that the cost of presenteesim due to ill health is estimated at 2.3 to 2.8 times the cost of absenteeism – representing a cost of S$7.6 billion by 2030 on a lower bound estimate.

 

Mercer aging workforce report (exhibit15)

 

Neil Narale, Singapore business leader for Mercer Marsh Benefits, said: “With improved management of health conditions permitting individuals to stay in the workforce longer, increasing financial needs in retirement, as well as more flexible employment options, such as working from home, and on-demand jobs in the gig economy, there is a growing trend for Singapore employees to postpone their retirement.”

Narale noted that with health risks increasing with age, organisations need to adapt to current demographic trends by implementing strategies to mitigate the higher costs of ill health and capitalise on the productivity of an older and potentially shrinking workforce.

“This includes workforce analytics to characterise productivity drivers, as well as evidence-based workplace strategies such as health initiatives, workplace redesign, and return-to-work programs,” Narale added.

READ MORE: UOB’s group HR head: learning is not just for the young

He pointed out that while an aging workforce may present challenges related to higher healthcare needs, older workers are also associated with advantages such as greater firm-specific knowledge, and lower turnover rates.

“If managed properly, diversity of age at work can serve to improve productivity and reduce the need for governments to tax corporates and the next generation to support the elderly,” he added.

“Consequently, as business leaders and governments design productivity-enhancing changes, it is important for them to consider the implications of an aging workforce in the development of such strategies. A holistic approach that aims to improve the overall health of the workforce, while pre-emptively introducing initiatives to enhance productivity, will enable organisations to capitalise and maximise the productivity of an aging and potentially shrinking workforce,” concluded Narale.

ALSO READ: Singapore’s re-employment guidelines for older workers, effective July 2017

Mercer ageing workforce infographic

Infographic and photos / Mercer



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