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Medical inflation rate in Hong Kong highest in Greater China

Rise in cancer cases and an ageing population put huge strains on medical services, according to Aon Asia Healthcare Trends Report 2017/18

HONG KONG, CHINA – Aon plc (NYSE:AON), the leading global professional services firm providing a broad range of risk, retirement and health solutions, has launched its inaugural Asia Healthcare Trends Report 2017/18.

The report examines medical inflation, its key drivers, and prevailing cost management strategies by insurers across 11 markets in the region. Each market is also allocated an Aon Medical Inflation Index (AMII) score, which compares the average medical inflation rate in each location for 2017 and 2018 with a projected inflation rate for the next three years. The AMII score for Hong Kong is 78.8–better than the regional median of 82.7 but the highest in Greater China.

Medical inflation forecast for 2018 is 8.4%, up slightly from the 8.2% forecast for 2017. However, 40% of insurers predict a significant increase in healthcare costs over the next three years.

Trends in cost management

Asia is being hit by a convergence of several unfavourable factors including a rapidly growing middle class with heightened expectations of healthcare outcomes, an ageing population, and high incidence of non-communicable diseases such as cancer, cardiovascular disease, and respiratory-related conditions.

The report tracked a moderate reduction in inflation rate in Hong Kong from 2014 to 2016, from 9.0% to 7.5%. However, inflationary pressures have been building on a number of fronts–notably an ageing population and public health system struggling to cope with increased demand. The report noted that a majority of Hong Kong residents are now 50 to 59 years of age, and over time, a large population of seniors aged 80 years and above will put significant strain on medical and care services.

Furthermore, in the decade between 2003 and 2013, new cancer cases increased at a rate of 3.1%, compared to population growth of just 0.7%. New cancer cases in Hong Kong hit a high of 30,318 in 2015, an increase of 2.4% from 2014. The increase in incidence of cancer decreases quality of life for residents in their most productive years, which has direct and adverse impact on the economy. The report also states that inpatient costs are the primary driver of inflation, with diagnostics for cancer-related illnesses as the top inpatient cost.

Kitty Chan, Managing Director, Health & Benefits, Hong Kong, Aon, says: “The Hong Kong healthcare market finds itself at an interesting tipping point. The norm over recent years has been the provision of high standards of care through the public system at minimal cost; however, doubts over medical inflation persist, encapsulated in the downcast medium-term prognosis of Hong Kong’s medical insurers over the projected inflation rate.”

On a positive note, Hong Kong is the most advanced market in Asia in terms of employee wellness programmes for women’s health-related initiatives. This could be prompted, in part, by the 70% increase in incidence of breast cancer cases from 2005 to 2015, compared to only a 40% increase in all other female cancers combined during the same period.

Tim Dwyer, CEO, Health & Benefits, Asia Pacific, Aon says: “Consistent with the majority of markets profiled in our report, Hong Kong’s insurance community expressed the view that it is inpatient costs which are the primary driver of medical inflation. This outcome is concerning, particularly as 40 per cent of participating medical plan insurers are forecasting medical inflation to increase significantly over the next three years. With cancer related costs being their top inpatient cost, followed by cardiovascular diseases, there is an urgent need for insurers, healthcare providers and employers to better target their investment into employee wellbeing initiatives to ensure that equitable, affordable healthcare is universally available”.