Click / Tap image to enlarge
Everything is pointing south in terms of health. Malaysia is also becoming an ageing nation. If these issues are not addressed quickly, the consumption of healthcare will be much higher. - Ho Kenny Yap/The Edge
When employers reduce benefits — for example, by restricting your medical coverage, the panels you are allowed to visit, the drugs the physician is allowed to prescribe or even the push for co-insurance — this clearly will have an impact on your productivity and engagement levels because you feel that your benefits have been taken away. - Collar Kenny Yap/The Edge
Malaysians will need to brace themselves for higher public healthcare costs in the coming years following an increase in the reported cases of non-communicable diseases. The higher costs are an indication of the country’s rising medical trend rate, says Mercer Marsh Benefits, an affiliate of Marsh Insurance Brokers (M) Sdn Bhd.
According to the 2018 Medical Trends Around the World report, Malaysia’s medical trend rate is expected to hit a high of 12.5% this year, compared with 11.6% last year and 11.5% in 2016. The country has the third highest projected medical rate in Asia after the Philippines (13.1%) and Indonesia (12.6%).
The medical trend rate is a year-on-year cost increase for claims on a per person basis made under a medical insurance scheme.
Healthcare costs continue to outpace inflation. The report points out that the projected inflation for this year stands at 3.2% compared with an estimated 3.8% last year, says Ho Mun Kiat, senior vice-president and national practice leader at Marsh Insurance Brokers.
According to the report, the rising medical trend rate is mainly due to hospital costs such as the use of surgery and inpatient rooms and the rental of inpatient equipment. Meanwhile, 67% of the claims were for inpatient medicines, materials, prostheses and supplies while the other 33% were for inpatient fees charged by physicians and other healthcare professionals.
It does not help that medical insurance premiums have gone up 10% to 15% in the last decade, Ho tells Personal Wealth. “There isn’t much drive to get people to become healthier because the mentality is still, ‘If anything happens, the employer will pay for me’. We noticed this because when employees get sick, they just fall back on their employers’ health plan,” he says.
“But employers are also feeling the burden. Every year, they come to us and say they need to pay a 10% to 15% increase in the overall premiums annually and that they simply cannot afford to anymore.”
The poor performance of the ringgit is another contributing factor. “Most medical equipment and supplies are imported, from drugs and medical devices to the operating theatre. If the ringgit does not get to where we want it to be in the next year, it will be worse as we are importing inflation,” says Ho.
“If healthcare costs continue to rise at this pace, it will be difficult to manage the affordability of healthcare. Not only for employers but also for individuals like you and me.”
The highest insurance claims are for cancer and the diseases of the circulatory system, followed by gastrointestinal diseases and respiratory conditions. “Non-communicable diseases continue to be one of leading reasons for claims across all regions in the world,” says Ho.
“Insurers generally believe that an increase in non-communicable diseases — for example, heart disease, cancer, stroke, chronic respiratory disease, diabetes, Alzheimer’s, mental illness and kidney disease — together with supplier increases (such as the availability of and access to new medical technologies) will drive [the overall public healthcare] cost over the next three years.”
According to the report, other factors include changes to health provider fee guides/schedules, rising employee expectations and ageing. “Increased workplace and/or personal-related stress/pressure as well as changes to public/government social security schemes and/or health reform/legislation also ranked high globally as potentially having a large impact on costs in the coming years,” it says.
“Our overall health is deteriorating. There are numerous statistics that show Malaysia is the most obese country in Asia and the fastest growing diabetic nation in Southeast Asia,” says Ho.
“Everything is pointing south in terms of health. Malaysia is also becoming an ageing nation. If these issues are not addressed quickly, the consumption of healthcare will be much higher.”
Employers need to emphasise that their objective is to offer healthy living rather than healthcare, which usually comes in at the end, he says. “This type of engagement is important because most of the time, non-communicable diseases are behaviour-driven.
“Employers are not doing enough on awareness and prevention. They need to drive home the message that your health is your responsibility as much as it is our responsibility to help you manage that. Employers cannot just keep footing the bill. It is not at all sustainable.”
Ho says most employers look at encouraging healthy living as a one-off event rather than a continuous engagement process. “For example, the human resources department decides to run a day-long wellness programme, where they get a doctor or a specialist to come in and talk about heart disease. They also get a bunch of employees to attend the talk and then claim they have done their part to promote wellness. But that is not wellness, it was just an event,” he adds.
“The journey towards wellness is a process, it is not an event. This is why we are not seeing desired results.”
How companies can tackle the problem
Tweaking the design of insurance plans is one area employers can look into, says Joan Collar, managing director and employee health and benefits leader for Asia at Marsh (Singapore) Pte Ltd. “Most organisations tend to not change their plan design for a long time, so it is important that you take the data the insurance companies and brokers provide to understand what the key drivers are and look at the plan design changes that have taken place.
“They should look at the plans that are driving higher utilisation, which demographic has the highest claims and what type of illness patterns are observed in insurance claims. They can use this information to bring about change and reduce the overall cost of insurance premiums.”
She adds that it is crucial for organisations to vigorously collect and evaluate their data before making amendments to suit their employees’ needs.
The report says the top three ways employers are engaging to improve the health plans of their employees or contain healthcare costs are by implementing flexible benefit programmes, creating or expanding onsite clinical services and creating or expanding wellness programmes. It adds that more organisations are implementing consumer-based healthcare options — for example, requiring employees to pay a portion of their claims such as co-insurance and deductibles.
Collar reminds employers that their approach in designing their company benefits programme has a direct impact on employee well-being and productivity. “When employers reduce benefits — for example, by restricting your medical coverage, the panels you are allowed to visit, the drugs the physician is allowed to prescribe or even the push for co-insurance — this clearly will have an impact on your productivity and engagement levels because you feel that your benefits have been taken away.”
The impact of such restrictions are greater if one does not possess a comprehensive personal medical insurance. “This is the reality in Malaysia. The average individual does not have sufficient coverage or just does not purchase the right kind of coverage. When he buys insurance, it tends to be life insurance, not medical because he feels that the employer will provide the coverage, or there is always the government hospital to fall back on,” says Collar.
“But the cost of healthcare is taking a toll on the public coffers as well. The cost of care provided by the government will soon become an issue. There will be more cost pressures, whether we are prepared for it or not.”
To mitigate this, she suggests that employers engage the Employees Provident Fund — one of the largest statutory retirement funds in the region — in discussions to consider enabling contributors to use their contributions to buy portable medical insurance coverage. “This will complement your employers’ coverage and you will have continuous medical care when you move from one employer to another,” she says.
Collar recognises that it will take a lot of determination to implement such mechanisms as policies will have to change. “I hope that employers can influence the EPF to consider this. But it will take a much larger policy and infrastructure change to ensure that the portability is there and every individual has adequate coverage,” she says.