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Study Projects Singapore’s Healthcare Cost Inflation to Remain Relatively Flat in 2020

In the sixth annual survey by Mercer Marsh Benefits, it projected that Singapore’s medical cost inflation would remain flat at 9.5 per cent in 2020, down from 10 per cent in 2019.

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 Singapore reported medical care cost increases of 10 percent, 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 negative 0.2 percent, softening to 9.5 percent. Singapore’s medical trend rate, which measures medical cost inflation is below the 10.7 percent projected rate across Asia.

Among the 11 Asian markets surveyed, Singapore’s expected medical trend rate for 2020 came in eighth. Indonesia is top with a projected 13.8 percent increase, followed by Malaysia at 13.5 per cent and Vietnam at 12 per cent.

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.”

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 percent 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 percent 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.” Added Joan Collar.

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 percent in Asia, saying it was an active part of their current approach to plan management, up from 32 percent in 2019. In Singapore, telemedicine providers such as Doctor Anywhere reported a 156 percent increase in digital active users, and MyDoc recorded a 147 percent increase in the last year. Furthermore, 47 percent of insurers in Asia now cover preventive health initiatives, such as screenings, with an additional 22 percent 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 percent in Asia expect their employer-sponsored plans will cover COVID-19 vaccinations, while 82 percent, compared to a global average of 69 percent, expect to cover COVID-19 in-patient treatments.

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 percent 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. [APBN]