By Chino S. Leyco

The Philippines is expected to see the highest medical inflation rate in Asia that will outpace the full-year inflation forecast by the Bangko Sentral ng Pilipinas (BSP) for this year, Mercer Marsh Benefits’ latest survey showed.

Based on the 2018 Medical Trends Around the World, Mercer Marsh has projected that the country’s medical inflation rate, based on the cost of private healthcare plans, to reach 13.1 percent this year.

The medical inflation forecast is also higher than the actual headline rate as of September this year at 5.0 percent, which is above the government’s target of 2.0 percent to 4.0 percent.

Last year, the Philippines’ healthcare costs rose by 12.4 percent, according to Mercer Marsh.

Mercer Marsh surveyed 225 insurers across 62 countries for the study. It found that the global medical cost in 2017 increased at 9.5 percent, almost three times the inflation rate of 3.4 percent. It also pegged medical inflation for 2018 at 9.1 percent.

“With the financial strain this is expected to bring many companies who pay for employee health insurance premiums, especially those with large workforces like those in the business process outsourcing (BPO) sector in the Philippines,” Mercer Marsh said.

Insurers attributed the rise in costs to the increasing incidence of non-communicable disease such as heart disease, cancer, stroke, chronic respiratory disease, diabetes, and kidney disease.

“Aside from the obvious threat to the life-span and quality of life of its population, the increase in chronic non-communicable diseases in the Philippines can become a big economic hurdle,” Teng E. Alday, Mercer Philippines, Inc. chief executive said.

“The country’s upwardly-mobile young population has been one of our country’s key economic drivers. However, if more of them are getting sick, their long-term treatments will be a financial burden both the private and public sectors will have to bear,” Alday added.

Another trend seen to drive medical inflation rates is increased workplace and/or personal-related stress/pressure.

“Studies have shown how these impact not just physical health, but mental health as well,” Alday said.

“However, it can be challenging to fully grasp how prevalent mental health issues are in the country as many who suffer are unable to speak up due to the stigma and misunderstanding they anticipate they will face,” he added.

Employers are encouraged to have a proactive and holistic approach to wellbeing, in which mental health is recognized alongside physical health, as one of the essential building blocks to help employees fulfill their potential.

“Traditional medical insurance designs are mainly based on receiving crisis treatment in a clinic or hospital setting while seldom involve the principal of encouraging a healthy lifestyle. Adding the preventive elements into the design will help lower the employee health care cost,” Alday advised.

Other factors seen driving medical inflation rates are supplier increases (such as availability and access to new medical technologies), changes to health provider fee guides/schedules, rising employee expectations, changes to public/government social security schemes and/or health reform/legislation.

“Given how dynamic these factors are, employers need to be smarter about their organizations’ healthcare plans, using data and harnessing digital advancements to fine-tune their approach,” Alday said.