Skip to content
Market Insights Workforce insights The rising cost of employees' healthcare
The rising cost of employees' healthcare

The rising cost of employees' healthcare

Companies in Asia continue to face rising cost of employees’ healthcare that outpace the inflation rate in most major economies.

Companies in Asia continue to face rising cost of employees’ healthcare that outpace the inflation rate in most major economies. In 2016, a research  by Mercer Marsh Benefits, a partnership between global professional services firms, Mercer and Marsh, found that rise in medical costs in Asia are estimated at 11.5% against an average regional inflation rate of 2.1%.

The research was conducted on a survey of 171 insurers across 49 countries (outside of the United States). In Asia, among the highest cost increases are expected in Vietnam (19.3%), Malaysia (17.3%) and Indonesia (11.8%). It also revealed that the main causes of claims cost in 2015 were diseases of the circulatory system, cancer, respiratory conditions and gastro-intestinal diseases.

The question is, what is driving these increases?

According to the said research, healthcare cost increases are being driven mostly by non-communicable diseases (NCDs). These are diseases that are frequently caused by an individual’s unhealthy lifestyle choices such as smoking, a lack of exercise and a poor diet. Some of the most common NCDs are cardiovascular diseases (CVD), diabetes, cancer and chronic respiratory diseases.

Interestingly, the research also highlighted that the role of governments in specific markets can greatly impact the costs. It gave the example of a recent legislation in Vietnam that is anticipated to raise the cost of some public hospital services and products by up to 30%. Malaysia’s introduction of goods and services tax (GST) in 2015 also increased the costs of private healthcare as a result of the government exempting only public healthcare from GST.

In addition, the number of elderly people in Asia is said to increase by 200 million by 2030, a 71% increase compared to 31% in Europe and 55% in North America. The growing number of elderly population is mostly driven by the increased in life expectancy and falling fertility rate. The increased age of employees would naturally lead to increased healthcare costs, especially for older employees with higher health risk.

External factors such as new government regulations and the changing demographics are inevitable causes, however employers can help employees live a healthier life and improve the state of the NCDs. One way is to help employees quit smoking. It may be easier said than done but studies have revealed higher chances of employees quit smoking if they were given financial incentives as a mode of reward (encouragement).

An example was the innovative study conducted by researchers at a healthcare company, CVS Caremark. The researchers introduced a “deposit program”, in which smokers pay a deposit of US$150 to a depository that will be returned if they successfully quit smoking. On top of that, there is an additional US$650 reward. According to the researchers, the deposit program had significant effect, with higher abstinence rates through 6 months.

Companies can also utilise technology to track the fitness level of their employees by using fitness trackers. These are watch-like devices that keep track of the number of steps walked, heart rate and hours slept by the employees. The data can then be used to negotiate lower costs of insurance premium for healthy employees. This method was used by a tech-company called Appririo, where it handed out tracking devices to about 400 employees and successfully convinced its insurance company to lower its rates by 5% (US$280,000) with the data collected.

Last but not least, eating right matters. Employers are in excellent position to influence good eating habits on their employees through various programmes. Consider introducing a workplace nutrition programme, where policies are set to encourage healthier eating habits and work environments such as the pantries or canteens are stock with healthier food options. Another way is to bring in vending machines with healthier food and drink options or organise a fruit bazaar every now and then to make it more convenient for your employees to get their recommended 2 servings of fruits daily.

Employers in Asia need to realise that the cost of healthcare in the region is certain to rise year after year given the various ineluctable causes. It is therefore of the utmost importance for employers to be more financially vigilant, and play a stronger part in promoting healthier work-life culture in their companies. Focusing on healthy lifestyle choices can boost productivity, increase employee engagement, reduce absenteeism and employee turnover and ultimately lowering the costs of employees’ healthcare in the long run.


This article is either written or edited by JobsDB HK. If you would like to publish it on other website or publication, please contact us by email: [email protected]. JobsDB reserves the right to take legal action against any person that infringes the copyright.

Subscribe to Market Insights

You can unsubscribe from emails at any time. By clicking ‘subscribe’ you agree to our privacy policy