Costs of PH healthcare benefits expected to increase in 2019

Employer-provided health care benefits costs are expected to increase from 10.3 percent this year to 11.5 percent in the Philippines in 2019.

This was according to a survey of medical insurers by Willis Towers Watson, a leading global advisory, broking and solutions company.

The survey, called the 2019 Global Medical Trends Survey, said a few markets – including the Philippines, India, China and Malaysia – expect to see a cost increase of more than 10 percent in 2019 in terms of healthcare.

Insurers blame the high cost of medical technology and the overuse and overprescribing of services as the major cost-driving factors, and caution that soaring hospital/inpatient and pharmacy costs will become significant factors over the next five years.

In addition, the projected cost trend for 2018 in the Philippines was significantly higher by close to 20 percent than what insurers projected the year before, as a result of the unexpected increase in general inflation.

Economists have a variety of assumptions regarding the increase in the Consumer Price Index (CPI). Historically, medical inflation is roughly four percentage points higher than CPI.

“The reality on the ground for many employers is that rising health care costs continue to be a major issue, and are unsustainable over the long term,” said Susan La Chica, Head of Health & Benefits, Philippines at Willis Towers Watson.

“To better control costs, many employers are taking a close look at how they design and deliver health care benefits. There are also fundamental concerns over how medical treatment is being provided and consumed, and the cost implications of innovative future treatments, all of which can fuel sharp cost increases down the road," she added.

When asked for the most significant cost-driving factors outside the control of employers and vendors, nearly twothirds (60 percent) of the insurers in the region cited the high cost of medical technology, followed by providers’ profit motives (37 percent).

Moreover, eight in 10 insurers (83 percent) ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behavior. Just over half (53 percent) cited overuse of care due to employees seeking inappropriate care.

“While cost management remains critically important, we expect that more structural changes may be needed around how medical services are consumed and provided,” said La Chica.

“In many instances, costs are driven by overuse of care, whether this is due to an increase in lifestyle-related chronic conditions or over-cautiousness of medical practitioners that result in unnecessary treatments or diagnostic procedures recommended by service providers," she added.