30 November 2020
HONG KONG, HONG KONG
Hong Kong’s medical trend rate – which measures medical cost inflation – is projected to rise to 9% in 2020, up from 7.9% in 2019, according to a new report by Mercer Marsh Benefits (MMB).
The sixth annual, MMB Health Trends: 2020 Insurer Survey formerly known as Medical Health Trends Around the World survey), surveyed close to 240 insurers across 59 countries, excluding the United States, between early June and mid-July 2020.
In 2019, insurers in Hong Kong reported cost increases of 7.9%, which was 2.7 times the rate of inflation. In 2020, medical costs in Hong Kong are expected to outpace general inflation by 4.5 times with an average rise in medical costs of 9%, below the Asia average of 10.7%. Across the 11 Asian markets surveyed, Hong Kong’s projected medical trend rate for 2020 is the lowest. Indonesia is top with a projected 13.8% increase, followed by Malaysia at 13.5% and Vietnam at 12%.
In 2021, however, medical costs in Hong Kong are likely to be affected by the changing patterns of outpatient and inpatient usage, says Richard Roper, Health and Benefits Business Leader at Mercer Marsh Benefits in Hong Kong.
“Based on Mercer’s latest Hong Kong Employee Health and Benefits report, we expect a decrease both in-patient and out-patient costs. As a result of COVID-19, we’ve observed a reduced demand in medical claims as non-essential doctors’ visits are less common. That said, we also see renewed interest in telemedicine and extended medical leave provisions which will likely have an impact on cost and expenditure.”
COVID-19’s lasting impact on employee health benefits
Disruption to the delivery of healthcare and lasting changes to work patterns resulting from the COVID-19 pandemic will have a major impact on both the cost and design of employer-provided health benefits.
The survey revealed that 68% of insurers globally expect increased medical claims driven by COVID-19 diagnostics, care and treatment. Insurers also said they expect increases in medical costs to continue to vastly outstrip inflation. For 2021, 86% of insurers in Asia expect the trend to sustain or increase.
On the double-digit 2020 increase for Asia, Joan Collar, Mercer Marsh Benefits Asia Leader said, “The region was the first to be hit by COVID-19 and has “bounced back” faster than many other parts of the world, as a result of swift and widespread containment efforts. Much of the impact from COVID-19 claims deferral was felt in the first part of 2020. A significant portion of medical spend, including inpatient and outpatient expenses generally covered under medical plans, given that employees heavily rely on employer-sponsored medical in some of the region’s countries, has resumed.
“The rise in medical costs also reflects the increased unit cost of care due to providers passing on the cost of personal protective equipment (PPE) needed to safely perform services in their bills as well as the higher cost of supply imports due to exchange rate fluctuations.”
Broadening suite of solutions
The COVID-19 crisis has highlighted the fragility of current employee benefits systems, many of which are paper based and cannot be accessed or managed remotely. With many employers now looking for benefit providers that can offer additional benefits such as mental health, preventive care, and an enhanced range of digital and online services, insurers are increasingly looking to broaden their suite of solutions.
The survey found an increase in the number of insurers offering virtual health consultations, or “telemedicine” with 47% in Asia, saying it was an active part of their current approach to plan management, up from 32% in 2019. Furthermore, 47% of insurers in Asia now cover preventive health initiatives, such as screenings, with an additional 22% indicating they are experimenting or have developed plans to initiate this within the next 24 months.
Mr Roper said, “We see a corresponding emphasis among companies in Hong Kong on employee health and well-being. Preventative wellness measures currently take the form of health talks and health screenings. To meet the new health challenges posed by remote working and to contain growing costs, companies have to reimagine the benefits they offer their employees and the way in which they deliver them. This includes flexible benefit programmes which only one in five companies in Hong Kong companies currently provide. Flexible benefit programs not only enhance employee engagement by providing highly tailored options but also help companies stay within allocated budgets.”
Employer-sponsored plans will continue to play an important role in providing people with the health services they need. For example, about 55% in Asia expect their employer-sponsored plans will cover COVID-19 vaccinations, while 82%, compared to a global average of 69%, expect to cover COVID-19 in-patient treatments.
Mental health support gap
The survey also found remaining gaps in mental health support, despite the increase in demand seen during the pandemic. For example, virtual mental health counselling is still not widespread, with only one-third of insurers offering it globally while 38% of insurers in Asia do not provide plans covering any mental health services. Less than half of insurers in Asia cover in-patient and outpatient treatment for mental health. This is despite the fact that in all regions, insurers rate private, employer-sponsored health care systems as more effective than public ones in providing the needed prevention, diagnostics and treatment of mental health disorders.
Vicki Fan, Mercer’s CEO for Hong Kong said, “Mercer’s Healthy Minds at Work Assessment reflected that the pandemic is taking a growing mental toll on employees in Hong Kong. Healthy people equals healthy business. A sound, holistic health plan for an organisation’s employees has always been essential, and with the ongoing impact of the pandemic, it’s more important than ever. With rising medical costs, it is important for more companies to focus on benefits that make the most difference and deliver the most value. People are a company’s greatest assets and are the key to companies emerging stronger from the COVID-19 crisis.”
The report focuses on employer-sponsored health programs in 59 countries, excluding the United States, provided between early June and mid-July 2020. This year’s report contains the annual quantitative medical trends table, based largely on data provided by nearly 240 insurers, and added content beyond the financial aspects of insurance coverage.
About Mercer Marsh Benefits
Mercer Marsh Benefits provides clients with a single source for managing the costs, people risks, and complexities of employee benefits. The network is a combination of Mercer and Marsh local offices around the world, plus country correspondents who have been selected based on specific criteria. Our benefits experts, located in 135 countries and servicing clients in more than 150 countries, are deeply knowledgeable about their local markets. Through our locally established businesses, we have a unique common platform, which allows us to serve clients with global consistency and locally unique solutions.