Study Predicts 12% Rise In Malaysia’s Employer-Sponsored Medical Benefit Costs

A Mercer Marsh Benefits report found that insurers expect the costs of employer-sponsored medical benefits programmes in Malaysia to increase by 12% in 2022, the third highest increase in Asia.

KUALA LUMPUR, June 8 – Insurers in Asia are experiencing above inflation rises in the cost of employer-sponsored medical benefits programmes over pre-pandemic levels, according to a report by Mercer Marsh Benefits (MMB).

According to findings in MMB Health Trends, costs in Malaysia decreased by 3 per cent in 2020, but increased by 8 per cent in 2021. Insurers are expecting medical costs to further rise by 12 per cent in 2022 — six times the predicted general inflation rate for Malaysia, the third highest increase in Asia, the report noted.

The report surveyed 210 insurers globally, including 74 in Asia, and identifies key trends influencing the future of employer-provided medical benefits.

The results show that five countries in Asia experienced higher medical trend rates than the regional average (8.8 per cent) in 2021, namely India with the highest medical inflation rate of 14 per cent, followed by China (12 per cent), Indonesia (10 per cent), Vietnam (10 per cent), and the Philippines (9 per cent).

Overall, 81 per cent of insurers in Asia indicated an upward trend in medical claims activity in 2021, even though 53 per cent of insurers reported lower medical claims than pre-pandemic levels. 

Malaysia’s Ministry of Health has estimated that non-communicable diseases (NCDs) cost the Malaysian economy RM 12.88 billion in terms of productivity losses arising from absenteeism, presenteeism or premature death in persons of working age per year.

The MMB Health Trend report reveals that cancer (55 per cent), diseases of the circulatory system (43 per cent), and Covid-19 (36 per cent) were the top cost drivers of medical claims in Asia in 2021, while respiratory diseases (47 per cent), gastrointestinal diseases (36 per cent) and Covid-19 (34 per cent) are health care conditions that experienced the most frequent claims.

Joan Collar, Asia Regional Leader, Mercer Marsh Benefits, commented: “Costs have soared despite lower levels of medical treatment than before the pandemic, a trend exacerbated by deferred healthcare treatments that for many have resulted in more adverse outcomes, leading to higher costs.”

“Reducing NCDs remains a key priority for employers for the health of their employees and their business. More than ever, employer-sponsored medical benefits should be viewed as an investment in employees’ well-being. Employees who feel their employer cares about their health and well-being are more motivated, productive, committed, and loyal,” she added.

Gaps Remain In Mental Health Coverage Through Inclusive Benefits Increase

Of all global regions, the report identified Asia as having the most inadequate coverage in relation to mental health, with only 34 per cent of insurers providing coverage for outpatient treatments in mental health, and just 21 per cent providing coverage for preventive mental health measures.

Moreover, 32 per cent do not offer any coverage for mental health services, reflecting a huge protection gap between access to benefits against the burden of mental health risks.

However, the study shows that 33 per cent of insurers are making changes to facilitate more inclusive medical plan designs by allowing coverage for the non-permanent or full-time workforce, with 54 per cent either adding or considering extending eligible expenses that are more inclusive for women.

“Employers need to develop a mental health strategy to enhance the overall well-being of their employees and refine their benefits strategy accordingly to align it to their diversity, equity, and inclusion goals and the different needs of their employees. With a sharp rise in the number of employees experiencing burnout and fatigue, this has become a workplace imperative. Employers need to deploy investments and resources to ensure they maintain a mentally resilient workforce,” Collar added.

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