Employers innovate to navigate rising medical costs

More employers are implementing both traditional and innovative approaches to manage rising healthcare benefit costs. According to a survey by Willis Towers Watson, requiring pre-approval for scheduled inpatient services, placing limits on certain medical services and using contracted networks of providers are cited as the most effective tools to help manage medical costs.

Interestingly, in APAC, alternative cash allowances (for using public facilities rather than private care) are perceived as significantly more likely to be effective. Tools such as stop loss insurance and coverage for catastrophic claims are seen as less effective than in other regions. Chris Mayes, Head, Advisory Services and Solutions, Health & Benefits, Willis Towers Watson said, “To understand—and try to rein in—medical costs, employers should understand what drives them, and then think about solutions.”

These innovations come in the wake of rising healthcare costs both across APAC. According to a survey, medical insurers in APAC are projecting the gross cost of health care benefits to rise 8.6% this year, compared to 7.8% globally. In the region, India (20.0%), Indonesia (11.0%) and Malaysia (15.0%) are leading the upward cost trend, followed by Mainland China (10.3%), Hong Kong (9.6%) and the Philippines (9.6%). Willis Towers Watson attributes the bulk of the cost increase to advanced medical technology, and the overuse and overprescribing of services.

APAC medical costs trends 2015 – 2017