It’s a common complaint: health insurance premiums go up every year. But why? And is there anything you can do about it?
There are two main reasons why healthcare premiums go up.
1. Healthcare inflation
Healthcare costs are rising consistently. According to the 2021 Global Medical Trends Survey Report, healthcare benefit costs are set to rise 8.5% in the Asia Pacific region this year. This compares to rises of 6.2% in 2020 (a lower figure due to the sharp decline in non-urgent surgeries and elective care during the Covid-19 pandemic) and 7.5% in 2019. The 2021 predicted increase is particularly high in Malaysia (12.5%) and Vietnam (10%).
Compare those healthcare inflation rates to general inflation rates in 2020: 3.8% in Vietnam, 2.9% in China, -0.4% in Singapore and -1.1% in Malaysia. It is clear that healthcare inflation is significantly outpacing general inflation.
If the cost of cars or food goes up, it is relatively easy to cut expenditure in those areas, but we don’t have the same flexibility with healthcare. If you need treatment for cancer, for example, you will want to access it as early as possible to have the best possible chance of success.
Why is healthcare inflation so high?
Multiple factors affect the cost of healthcare. These include:
- Increasing demand for healthcare due to an ageing population, rising rates of chronic disease, new treatments coming online and an increase in the number of people with health insurance.
- Overuse of care with medical practitioners overprescribing or recommending too many services as well as insured individuals seeking inappropriate care.
- The increasing cost of medical technology and research in general.
- High digitalisation costs within the insurance industry with investment into AI, anti-fraud systems etc
- Improved mental health awareness has amplified demand for mental health support services
Some experts argue that the last two points should mean that future medical inflation rises will reduce. Whether or not that proves to be the case, the unsavoury truth remains that medical inflation rates have a direct impact on consumers via rising private health insurance premiums. A contract with the same terms and benefits will inevitably go up in price and this is, at least in part, due to factors beyond the control of insurance companies.
2. Premiums rise as you get older
As we age we inevitably present a higher risk to an insurer and unfortunately premiums rise to compensate for that higher risk.
Is it possible to reduce my healthcare premium?
When it comes to health insurance, price should not be the determining factor when choosing a policy, although it will inevitably be a consideration. We always advise going for the most comprehensive cover that you can afford but if
What you should never do is skip healthcare insurance entirely because of the cost. With medical costs rising, the last thing you want is to find yourself having to foot the bill for expensive treatment entirely out of your own pocket.
Seek help to reduce your healthcare premiums
The key to finding a policy which meets your needs and budget is to take advice from a financial adviser who can offer choice, unbiased advice and access to a wide range of insurance companies and policies.
Infinity work with all the major insurance providers in Asia but are tied to none. Our advisers can chat through your requirements and help you optimise your insurance premium based on the specific requirements of you and your family. Please get in touch to discuss your needs.
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