Singapore's medical trend rate - which measures medical cost inflation - is projected to remain flat at 9.5% in 2020, down from 10% in 2019, according to a new report by Mercer Marsh Benefits (MMB).
In 2019, insurers in the country reported medical care cost increases of 10%, which
was 10 times the rate of inflation. In 2020, medical costs are expected to follow the same trajectory of the nation’s inflation rate at -0.2%, softening to 9.5%.
Singapore’s medical trend rate is below the 10.7% projected rate across Asia.
Across the 11 Asian markets surveyed, Singapore’s expected medical trend rate for 2020 came in eighth. Indonesia is top with a projected 13.8% increase, followed by Malaysia at 13.5% and Vietnam at 12%.
Neil Narale, Singapore Health Leader at Mercer Marsh Benefits, said, “Cost management remains a key priority for medical insurers and employers. While employees can take comfort knowing that the medical trend rate has softened slightly, we expect there to be an increase in outpatient costs as individuals return to care in the second half of this year. We are also expecting a rise in inpatient claims as waiting lists for inpatient treatment are cleared, which will carry on into 2021.
“Importantly, employers will need to balance economics and empathy to provide health programmes that are meaningful, but also maximise return on investment.”
Impact of COVID-19 on employee health benefits
The COVID-19 pandemic has disrupted the delivery of healthcare and work patterns for employees around the world which has a flow on impact to 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,” she noted.
Expanding suite of solutions
The COVID-19 crisis has highlighted the fragility of current employee benefits systems. 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. In Singapore, telemedicine providers such as Doctor Anywhere reported a 156% increase in digital active users, and MyDoc recorded a 147% increase in the last year.
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.
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.
Refocusing on employee mental health
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.
Mr Narale added, “Employers are re-focusing on employee mental health as an equally important factor to physical health and wellbeing for a productive and healthy workforce but more still needs to be done to address the effects of stress and anxiety in the workforce, whether it’s providing digital access to care, support groups or mental health programs.
“In response to this need, Mercer joined forces with Aviva earlier this year to provide existing corporate insurance plan clients the opportunity to enhance employer-provided insurance under a Mental Wellness Plan that provides employees access to and coverage for a wider range of mental health services.”
The 6th 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 US, between early June and mid-July 2020.
Stay in the know via our complimentary weekly newsletter
Check these out:
COVID-19 exacerbates retirement insecurity in Asia
Asia Pacific: Personal accident and health insurance to hit US$240.1bn in 2023
Final Sprint Messages to End the Year Strong II