The Aon Asia Market Review 2017 report forecasts a net medical inflation rate of 6% in Asia for 2017, marginally down on the 6.3% recorded last year.
Within the region several countries have the unenviable distinction of posting double digit forecast increases for 2017. These include Indonesia, Malaysia, Pakistan, South Korea and Vietnam. Conversely, the key markets of China (3%) and Singapore (8.7%) are forecast to experience significant declines in medical inflation year-on-year.
The now well-established drivers of medical inflation globally include an ageing population, the proliferation of chronic or non-communicable diseases and advanced medical technology. All of these cost-drivers are evident in Asia.
Across the region, two of the chronic diseases most responsible for lost productivity and premature death are hypertension and type two diabetes. The World Health Organisation reports that high blood pressure is the leading risk factor for death, claiming 1.5 million lives each year in southeast Asia. One in three adults in the region is hypertensive.
The Asian Diabetes Prevention Initiative reports that 60% of the global diabetic population lives in Asia, with 113.9 million adults in China affected, representing 11.6% of the adult population. In 1980, the corresponding figure was less than 1%. In India, 65.1 million adults have diabetes. These numbers give China and India the dubious distinction of having the largest number of diabetes sufferers in the world. The high prevalence of these chronic illnesses is largely attributable to modifiable lifestyle behaviours.
Evidence suggests that middle-class consumers in emerging markets increase their spending on healthcare. This is attributable to several convergent factors: adaptation of western lifestyle, demand for improved health outcomes, inadequate public healthcare systems, and proliferation of private healthcare providers inclusive of advanced medical technology.
To illustrate the above point, international consultancy firm McKinsey has forecast that consumer healthcare spending in China will grow at a compound annual growth rate of 11.6% between 2005 and 2025 with India in close proximity of 9% over the same period.
Given the proliferation of chronic illness and the contributory impact of modifiable lifestyle behaviours related to diet, exercise, alcohol, tobacco, and stress, it is encouraging to note that medical plan insurers in several markets are increasing their commitment to wellness-related services. Looking to the future, these services will need to be more targeted, both with regard to addressing the co-morbidities that are driving the claims experience and engaging those demographics most at risk.
You can download the Aon Asia Market Review here.