Global medical prices will keep rising in 2019
The 2019 Global Medical Trends Survey suggests that medical prices will keep rising in 2019. China, India and Malaysia rises could exceed 10%. Ian Youngman looks at what this means for medical tourism.
Employer provided health care benefit costs are expected to increase modestly around the globe in 2019, but there will be higher rises in parts of Asia, according to a survey of medical insurers by Willis Towers Watson, a leading global advisory, broking and solutions company.
Insurers blame the high cost of medical technology and the overuse and over prescribing of services as the major cost-driving factors and caution that increasing pharmacy costs will also become a significant factor over the next five years.
Implications for medical travel
The percentage rises are not as important as price differentials when considering the potential impact on medical travel.
While a significant proportion of medical tourism is driven by value and availability rather than price, countries dependent on low prices to attract lower budget customers could see numbers fall. For many countries in Europe, any price rise abroad that reduces the differential between what the treatment price is at home and overseas will decrease the incentive to travel. Note too that both airline and hotel prices are also expected to rise again in 2019.
It is clear that medical tourism destinations will need to ensure they provide value for money. Some places may want to change their promotional logic away from “we are X amount cheaper” to emphasising the quality of offerings.
As quality takes over from price in medical tourism, this will affect medical travel flow to countries which are regularly in the press about patient deaths, treatment problems, scams and illegal agents. These destinations will need to control quality, rather than hide or blame others when problems appear.
More countries are promoting their medical tourism sector, but if the international patient market is static or even decreases as fewer people are persuaded to travel (per the Europe example above), then competition will become intense.
2019 Global Medical Trends Survey in detail
The 2019 Global Medical Trends Survey, the largest of its kind in the industry, found medical insurers globally are projecting health care benefit costs to rise 7.6% in 2019, a slight increase over 7.1% in 2018.
Regional variations
The smallest increases (5.0%) are projected in Europe while the largest increases are expected in the Middle East and Africa, where costs are projected to jump 12.4%. Cost increases in the Americas, excluding the US, are expected to decline slightly but still increase at double-digit levels (10.7%). Health care benefit cost increases in the US are expected to decline slightly, from 8.7% in 2018 to 7.9% in 2019.
The study also found the outlook for cost increases over the next three years varies greatly by region. Only a third of insurers in the Americas (34%) expect higher or significantly higher medical trend costs over the next three years; however, 60% of Middle East and African insurers and 54% of insurers in Europe anticipate higher costs. Globally, nearly half of insurers (49%) expect cost increases will be higher or significantly higher.
Employer provided health care benefits costs are expected to increase by 7.8% in Asia Pacific in 2019, but India, China and Malaysia will see an upward cost increase of more than 10% in 2019.
Tables
Global medical trends: Health care benefit cost growth, 2017 – 2019
| 2017 | 2018 | 2019 | |
| Global | 6.7% | 7.1% | 7.6% |
| U.S. | 7.5% | 8.7% | 7.9% |
| Americas (excluding the US) | 11.1% | 11.0% | 10.7% |
| Asia Pacific | 7.1% | 7.0% | 7.8% |
| Europe | 4.4% | 5.0% | 5.0% |
| Middle East/Africa | 8.5% | 9.9% | 12.4% |
Source: Willis Towers Watson 2018
Global & Asia Pacific medical trends: Health care benefit cost growth, 2017 – 2019
| 2017 | 2018 | 2019 | |
| Global | 6.7% | 7.1% | 7.6% |
| Asia Pacific | 7.1% | 7.0% | 7.8% |
| Australia | 4.9% | 4.6% | 4.6% |
| China | 9.0% | 10.1% | 10.7% |
| Hong Kong | 7.0% | 8.0% | 8.6% |
| India | 7.6% | 9.2% | 10.6% |
| Indonesia | 11.1% | 10.9% | 10.8% |
| Malaysia | 9.0% | 11.4% | 13.1% |
| New Zealand | 6.9% | 5.4% | 5.4% |
| Philippines | 8.8% | 10.3% | 11.5% |
| Singapore | 8.3% | 8.8% | 9.1% |
| South Korea | 6.0% | 1.4% | 3.4% |
| Taiwan | 7.2% | 7.8% | 9.3% |
| Thailand | 6.4% | 7.0% | 8.5% |
| Vietnam | 11.0% | 15.0% | 16.3% |
Source: Willis Towers Watson 2018
The Willis Towers Watson Global Medical Trends Survey was conducted between August and September 2018, and reflects responses from 307 leading medical insurers operating in 77 countries.
Drivers behind cost rises
Insurers are predicting that pharmacy costs will become an increasingly significant part of medical expenses over the next five years. 80% in the Americas and 66% of Middle East and Africa insurers believe pharmacy costs will increase either modestly or significantly over the next five years.
The majority of insurers, except those in the Middle East and Africa, also think the cost for behavioural and mental health care will increase modestly or significantly in the future.
When asked for the most significant cost-driving factors outside the control of employers and vendors, 65% cited the high cost of medical technology, followed by providers’ profit motives (48%).
70% ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behaviour. This can be due to over-cautiousness of medical practitioners that result in unnecessary treatments or diagnostic procedures recommended by service providers as in some Asia countries. There is also an issue of lack of access and delays in service that has impacted India and Vietnam.
52% cited overuse of care due to employees seeking inappropriate care, which can be due to an increase in lifestyle-related chronic conditions (on the rise in both India and China).
Other survey findings
Include:
- Insurers report cardiovascular (54%), musculoskeletal (49%) and cancer (42%) as the top three conditions that cause the highest number of claims. When it comes to medical conditions that cause the highest number of claims, insurers in Asia are seeing an increase in cancer and cardiovascular ailments.
- The prevalence of other conditions such as diabetes and mental health are increasing rapidly. Almost a quarter of insurers expect mental and behavioural disorders to be a top three condition over the next five years.
- 63% use contracted networks, while 61% require preapproval for scheduled inpatient services to help manage costs. 57% place limits on certain medical services to control costs.
IMTJ note on consumer treatment prices
The prices paid by larger health insurers, particularly on employer paid health insurance, are effectively bulk-buy, wholesale prices, mostly within their own global health networks.
Insurers get discounts of around 15% from hospitals for bringing high patient volumes to them, and the biggest global insurers will look for discounts of up to 25%.
If insurers are seeing a 10% price rise, then the direct consumer may be seeing 12% to 15% in healthcare treatment prices.
It is clear that prices in some MENA countries, India, Malaysia and the Philippines are going to rise in 2019.