Healthcare inflation strikes a nerve across Southeast Asia

Updated: Apr 1

COMPENSATION & BENEFITS: Health benefits are always the source of much hand-wringing for recruiters, employers and employees alike, with the goalposts moving regularly and often significantly. Of course, 2020 and 2021 were no different.

With Covid-19 upending how health packages were formulated and the increasing use of medical practitioners’ services, healthcare costs have increased even more dramatically than the medical inflation employers had grown to accept prior to 2020.

A significant challenge for HR and recruitment professionals is striking a balance between what is affordable for companies, and what is acceptable to employees. According to AON’s Global Medical Trends Report, 2022, the use of outpatient services recorded the most significant drop in Asia-Pacific last year, due largely to quarantine and lockdown restrictions. With that said, 67% of respondents expected medical costs to continue to accelerate over the next three years, owing primarily to rising inflationary pressures in tandem with countries relaxing mobility restrictions.

Aon explains that the overuse of specialists and the overprescription of medication are two of the biggest culprits in the price hike.

Tim Dwyer, CEO, Health Solutions, Asia Pacific at Aon claims most employers in Asia offer healthcare benefits that are designed to aid consumption. However the consultancy now advocates for companies to introduce design measures, such as co-payments, dollar limits in plans, benefit limitations, on-site physicians, fitness centres, health screenings, and health education discussions to help minimise these costs.

"Against the backdrop of an ageing workforce and increasing prevalence of sedentary lifestyles, the time is right for employers across Asia to develop sustainable wellbeing programs,” Dwyer says. "This will increase employee engagement, lead to a healthier and more productive workforce and, ultimately, improve business performance.”.

Wellbeing is indeed a growing trend, particularly in the realm of mental health. Employers are expected to recognise that physical and mental health are one and the same, and an important consideration when working out how employees are compensated. Therefore, it is in employers interests to create avenues for employees to stay in the right frame of mind to perform daily tasks.

Recent statistics back up this sentiment with the Asian Business Review showing that 78% of Hong Kong executives admitted to experiencing mental health symptoms over the preceeding 12 months - most of whom cited anxiety as the biggest symptom.

As with almost everything else, the pandemic has extrapolated these figures.

Employees have the added concern of not just worrying about job security, but also with feelings of isolation with the changing dynamic of remote working and the greater need to balance work and personal life. With this paradigm shift, HR managers must factor in these challenges more than ever before.

Employee benefits administration and healthcare management company Health Metrics works with clients to optimise employers' health insurance benefits, given how highly valued they are amongst employees. The Malaysia-based company cites an international Harvard Business Review survey which showed nearly eight in ten employees participating in health and wellness programs were satisfied and are less likely to look elsewhere for gainful employment.

It appears that HR teams around the region are responding to the trend and are now on the lookout for suitable health benefit packages, that include mental health provision. Acting fast will be the key for vulnerable employers here. According to the MMB Health Trends: 2020 Insurer Survey, approximately 45% of insurers surveyed cover outpatient treatment for mental health, while slightly more than 40% cover inpatient treatment for the same cause.

A one-size-fits-all approach will no longer work in terms of how health benefits are formulated. Employee benefits specialist CXA advised HR teams to be malleable and dynamic in ensuring their companies choose cost-effective solutions in addition to providing individualised programs for employees with the best care possible. Where a young family might place more priority on their children’s wellbeing, a more mature family might be more concerned about retirement and the associated health concerns of older age.

Siemens Singapore provides a good example of a forward-thinking organisation that takes a well-rounded approach to health benefits. Its system attempts to reduce the cost of inpatient and outpatient visits, and overprescription, by seeking to create a healthier workforce daily. Siemens Singapore provides a flexible spending account where employees can make claims on various health concerns, purchase fitness equipment, attend wellness programmes, and buy health supplements. In addition, legally married employees can claim SGD 3,000 for every childbirth to cover delivery expenses, and workers who are over 40 get SGD 700 biennially for full body or targeted health screening.

HR managers and recruiters must face the dual challenges of how health benefits impinge on a company's bottom line and adequately understand the current-day workforce's sentiment.

This feature was extracted from Chief of Staff Asia's report on Compensation, Benefits, and Employee Health. For further coverage, and access to the full report, please see any of the below links:

Rising costs, Falling loyalty: How Comp & Ben departments are fighting the war for talent (full report)

Benefit costs up but loyalty stagnant: Chief of Staff research (news highlight)

Salaries rising across ASEAN in 2022, and likely far beyond (feature)

Healthcare inflation strikes a nerve across Southeast Asia (feature)

Circles.Life doing it differently on comp & ben (case study) March 29, 2022

HR Tech Update: Data-led healthcare insights (HR Technology Focus) March 31, 2022

New trends emerge for non-cash benefits (feature) April 1, 2022 (feature) April 1, 2022

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