Healthcare costs take toll on Asians, says study
WITH the lingering worldwide economic crunch, the purchasing power of money has weakened and spending distribution takes away a significant amount for healthcare costs which will balloon to almost ten-fold, according to a study by the Switzerland-based insurance provider, Swiss RE, citing that health protection gap (defined as the difference between the level of healthcare costs needed to meet consumer demands against the amount that would be available to cover the costs, if the total healthcare expenditure remained a constant percentage of GDP.) in the region will amount to US$197 billion by 2020.
The first of its kind study compares the health protection gap across 13 markets in the Asia-Pacific region, including Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Thailand, Taiwan and Vietnam.
According to David Alexander, Head of Business Development Asia, Swiss Re, the comparison will incite the development for more health and medical insurance across the region, to fill the so-called gap.
“The wide range in Health Protection Gaps across Asia-Pacific is partly due to the differences in the size of both the population and the economy from market to market. To filter out this factor, we also computed the gap per capita,” said Alexander.
The study also cited that total healthcare costs in the Asia-Pacific region are projected to increase by 8.2% annually to USD2.7 trillion by 2020.
Meanwhile, emerging markets, which currently have lower healthcare expenditure as a percentage of GDP, will have rapid growth in healthcare costs during this period.
Based on Swiss Re’s report, the average real GDP growth rate from 2014 to 2020 for Asia-Pacific will be about 5%. Robust economic growth, especially in the emerging Asian countries, will bring additional demand to the health and medical industry.
“People and countries tend to spend more on health and medical as they get wealthier. With economic growth in Asia-Pacific, especially in emerging markets, rising household income will lead to higher spending on health and medical care,” said Clarence Wong, Head of Economic Research & Consulting, Asia-Pacific, Swiss Re.
The breakdown of healthcare expenditure varies across Asia-Pacific markets. In 2010, more than half of the regional governments had to bear over 40% of the total healthcare expenditure, with Japan covering the highest proportion (83%). The other main funding source was out-of-pocket expenses, which ranged from a low of 14% (Thailand) to 61% (India) of total healthcare expenditure. Private prepaid plans contributed less than 10% of the total healthcare expenditure for all the markets covered in the study, with the exception of Taiwan which came in at 19%. The total healthcare costs in Asia-Pacific are projected to increase from US$1.2 trillion in 2010 to US$2.7 trillion by 2020.
Meanwhile, Health/medical insurances are expected to provide cost buffer for consumers in the event of this gap or every time the cost of healthcare outpaces inflation. (HCA)
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