MMB survey finds rising medical costs drive innovation in employer-sponsored health plans

MMB survey finds rising medical costs drive innovation in employer-sponsored health plans

Rising medical costs in Asia driving innovation in employer-sponsored health plans

  • June 10, 2019
  • Hong Kong,
  • The rise in Asia’s medical costs continue to outpace inflation by four times
  • Top three drivers of medical costs in Asia are metabolic and cardiovascular risk, occupational risk and environmental risk
  • Insurers respond with investments in quality-focused healthcare solutions and programmes
  • 78% of insurers globally support or consider supporting virtual health consultations to manage member health and contain cost

According to the Mercer Marsh Benefits (MMB) 2019 Medical Trends Around the World report, medical costs in Asia continue to outpace general inflation by four times with an average rise in medical costs of 10.4% in Asia in 2018, compared to the global average of 9.7%. A similar increase is expected for 2019 and even higher for 2020. As the cost of health benefit programmes continues to rise globally, employers have the opportunity to contain cost through smarter plan design and employee access to quality-focused healthcare.

In its fifth year, this latest report surveyed 204 insurers across 59 countries*, assessing how health conditions, supplier factors and consumer habits are driving cost, as well as providing insights into how insurers are responding.

Globally, the top three health risk factors influencing medical cost remain metabolic and cardiovascular risk, dietary risk and emotional/mental risk. On a regional level, there is variation in the top risk factors (see also Table 1):

  • Asia: environmental risks (52%) as the effects of high pollution levels in many of the region’s major cities take their toll
  • Latin America: dietary risk (85%)
  • Europe: emotional or mental risks (61%)
  • Middle East and Africa: occupational risks (59%), childhood and maternal under-nutrition (24%)

In response, the number of insurers investing in initiatives to enable quality-focused care, to better guide members to the right care options for them more quickly, has more than doubled. Globally, 29% now name this type of investment as a top strategic priority. Insurers are responding by helping members make smarter healthcare choices with 63% of insurers providing education, tools and incentives to drive positive behaviour. The Middle East and Africa had the highest rate of adoption of programmes of this type, with 71% of insurers proactively using such consumer focused tactics with plan members. Globally, 78% are now considering or already support virtual health consultations.

Hervé Balzano, Mercer Marsh Benefits International Leader, observed: “Rising medical costs show no signs of abating. Indeed, according to our research a majority of insurers globally now believe that in 2020 medical inflation will either remain constant or increase.

“The future of work demands healthy and engaged employees. As the cost of providing medical benefits continue to rise, employers should assess how to make the most of plan design, including giving access to quality based care to drive better outcomes. Plans should be reviewed with both cost optimisation and employee engagement lenses.”

Richard Roper, Health & Benefits Leader Hong Kong at Mercer Marsh Benefits Asia said insurers in Asia were reporting an increase in claim costs caused by mental conditions.

“Consistent with previous years, environmental risk is impacting Asia’s medical costs more than any other region in the world due to increasing pollution,” said Mr Roper.

“What has changed, however, is that insurers in Asia are reporting a rise in claims for mental health issues. Mental health illnesses have become a more common inclusion in claim categories and the stigma related to mental health and the treatment of it becomes less stigmatised.

“We’re seeing more companies in Asia starting to turn their focus on how they can support mental wellness in the workplace. Those that have implemented a strong mental health and wellbeing program are reaping the benefits, including attracting talent and experiencing less turnover,” he said.

To download a copy the report, please click here.

*Excludes the US.

Table 1: Insurers were asked to highlight the 3 risk factors that most influence employer sponsored group medical costs

 

Rank

Global

Asia

Europe

Latin America

Middle East, Africa

Metabolic and cardiovascular risk

1

91%

88%

92%

97%

88%

Dietary risk

2

56%

41%

51%

85%

71%

Emotional/Mental risks

3

44%

29%

61%

45%

12%

Occupational risk

4

43%

52%

42%

18%

59%

Environmental risk

5

30%

52%

19%

18%

24%

Tobacco smoke

6

22%

17%

27%

24%

24%

Childhood and maternal under nutrition

7

6%

5%

5%

0%

24%

Alcohol and drug abuse

8

5%

11%

3%

0%

0%

Traffic, violence and safety

8

5%

8%

0%

12%

0%

The report asked insurers for information on the rising cost of medical care in each market as well as the types, costs and frequency of medical conditions that were claimed for by company employees in 2018. As Mercer’s research parameters for the two reports are different, US data has been excluded from this release; however according to Mercer’s National Survey of Employer-Sponsored Health Plans 2018, US employers experienced a 3.6% increase in the average total health benefit cost per employee in 2018.

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