By Ho Mun Kiat ,
Mercer Marsh Benefits Leader, Malaysia
Malaysia’s medical trend rate is expected to increase 11.6% in 2022, higher than the Asia average of 10% according to the latest Marsh Mercer Benefits (MMB) Health Trends report. At the same time, insurers are beginning to respond to rising claims activities with tightening limits, higher deductibles and increasing program costs. This is an ongoing, long-term trend that will imminently impact the viability and sustainability of employers’ existing insurance programs and benefit plans.
Further adding fuel to fire are global supply chain problems, a weaker Ringgit, increases in transport and fuel costs, as well as the generally elevated level of inflation worldwide. These factors place additional upward pressure on prices of imported medical necessities — such as surgical supplies and medication — in addition to overall medical costs (including insurance program costs). Employers should act quickly to prevent employee-related expenses from spiralling out of hand.
One of the major underlying reasons for program costs trending upward in Malaysia is the increasing utilisation of healthcare among its workforce. This will continue to increase primarily because of two factors: chronic illnesses and the ageing population.
In particular, incidences of non-communicable diseases (NCDs) such as diabetes have been on the rise, according to official reports1. For outpatient treatment, there has been a surge in total claims due to increasing need for long-term medication; for inpatient treatment, the average cost per claim has increased. Inevitably, insurers in Malaysia have to respond by adjusting program costs and policy coverage limits.
To control costs, it is easy for employers to rely on negotiation with insurers via a broker. But there is no substitute for a strategic and proactive approach to ensure the sustainability of costs over the longer run.
A strategic and proactive approach involves drilling down and identifying areas where health risks are coming from, such as employees and job bands that make up the highest risk factors and contributing to the highest claim amounts. What follows can be a reassessment of existing benefit plan designs to focus more on the preventive aspects of healthcare and encouraging the right behaviour among employees.
To uncover the necessary insights and accurately determine the changes to be made, employers can partner with MMB and leverage data, technology, and analytics solutions such as BenefitMap™, Darwin™ and Benefits You℠ to optimise their benefit plans. The target would be achieving sustainable cost savings over the next three to five years, whilst the changes made can also provide a boost in attracting and retaining talent.
Since the pandemic began, employers in Malaysia have become more open to the adoption of Employee Assistance Programs (EAPs) to support mental health and wellbeing. However, underwriters remain unlikely to modify existing group insurance program structures or design new policies that omit mental health treatment or illness as exclusions.
The good news is that we have been successfully advocating, on behalf of employers, for insurers to allocate a small cap out of annual hospitalisation and outpatient limits to cover for treatments and services relating to mental health, while the limits themselves stay unchanged. This coverage includes preventive services such as counselling and therapy.
In addition, MMB also provides dedicated communication specialists to help employers strategize and frame internal communications around mental health to educate and build resilience. This helps employers to better deal with mental health as a significant emerging risk factor that has been proven to impact productivity and is linked to physical conditions such as heart disease.
As employees increasingly prioritise diversity, equity, and inclusion (DE&I) in the workplace, we also observe that more employers in Malaysia are introducing benefits for women — such as preventive health screening for females — as part of their benefit plans. Over time, doing so may result in lower costs due to a decrease in health risk and claims, while at the same time the inclusivity of women-centric initiatives can serve to positively highlight their credentials as employers of choice.
With the medical trend rate likely to continue rising and insurers preserving status quo, employers in Malaysia now have robust cost justifications to explore solutions that reduce their workforces’ physical and mental health risks, and enhance their benefit plans through strategic, data-driven approaches to bring about cost savings.
Lastly, we have found that every company has a very unique set of data and insights. While this means there is no one-size-fits-all approach in managing healthcare costs and crafting benefit plans, employers should continue to bear a universal truth in mind: Employees don’t crave healthcare — what they want is health.
1 - Institute for Public Health 2020. National Health and Morbidity Survey (NHMS) 2019: Non-communicable diseases, healthcare demand, and health literacy—Key Findings. https://iptk.moh.gov.my/images/technical_report/2020/4_Infographic_Booklet_NHMS_2019_-_English.pdf