Download your copy of the 2017 Cost of International Health Insurance Report, to read our analysis on the six primary findings from this report:
- Premiums in the US have increased by an average of nearly 14%.
- Singapore has replaced China to be ranked as the third most costly location for health insurance.
- Southeast Asia has seen an increase in ranking with five countries ranked in the top 20.
- Dubai has fallen in ranking slightly to 9th in 2017.
- When compared with 2016, some countries have seen average premiums increase while others have actually seen average premiums decrease.
- A number of countries have the same average premium.
Here, we take a look at the main global drivers behind the cost of international health insurance.
Primary global drivers behind the cost of international health insurance
The drivers mentioned below primarily pertain to international health insurance. While there is significant crossover with local insurance plans, there are drivers that are unique to the international market that might not have the largest effect on locally-based plans.
In the previous versions of Pacific Prime's Cost of Health Insurance report, we have identified and discussed a number of global factors that have been behind the cost of health insurance. It is our belief that for 2017 and possibly beyond, these drivers continue to be a major contributing factor. For a more in-depth look into these drivers, please review both the 2016 and 2015 reports, which can be downloaded here and here, respectively.
To summarize, the four primary factors influencing the cost of international health insurance in the majority of countries included in this report are:
- Increased demand for international quality private care
- Increased cost of health care
- Increased regulation
- Continuing challenges related to fraud
This section provides an update regarding the above factors.
Increased demand for quality private health care
While this trend has been present for many years in developed markets, it is starting to take off in emerging markets as well. For example, this report from the World Bank's investment arm, the International Finance Corporation, found that many emerging markets have been impacted by the global economic slowdown of the last half decade. While economies may be cooling, demand for health care has not decreased at all.
Experts usually name two major reasons for this increased demand: increased lifespan and, in many countries, an increasingly wealthy population. This growing number of high-income households are demanding access to better health care, and turning to the private sector to meet these demands.
Deloitte's 2016 Global health care outlook corroborates this fact stating, "By 2019, the number of high-income households (those earning over [USD 25,000] a year) will rise to over 540 million globally...The expansion in personal wealth should help to drive up private spending on health care."
Increased cost of health care
In almost every country included in this report's top 20 ranking, we have seen the cost of health care increasing. On a global scale, Deloitte's 2017 global health care sector outlook reports that, "major regions are expected to see health care spending increases ranging from 2.4 percent to 7.5 percent between 2015 and 2020."
From the figures in this report, it appears that Asia and transitioning economies are set to see the highest increases with Asia seeing a 5%, and transition economies seeing a 7.5% compound annual growth rate (CAGR) between 2015 and 2020 projected. This increase, if left unchecked, will result in drastically higher costs of care at all facilities, and in many cases higher demand for international health plans that can more effectively cover these costs.
Insurance, especially health insurance, is becoming an increasingly regulated industry. This is especially true for regions where international health insurance is popular or growing in popularity.
One example of this is in Asia, where - according to EY’s 2016 Asia Pacific Insurance Outlook report - regulators are developing more complex rules to protect consumers and reduce market risks. The report also lists regulation as a factor that will have considerable impact on insurance in the region.
Other locations are seeing even stricter regulation, the most influential of which is arguably Dubai (more on health insurance in Dubai is included later in this analysis). In terms of regulation, the Dubai Health Authority's mandatory coverage rules have had a direct upward impact on the price of plans in the city.
Continuing challenges related to fraud
Fraud is a serious and continuing problem for all health insurers and the greater health industry in general. All parties involved are indeed taking actions to try to stem the growth of fraud, but the number of and dollar amount associated with fraud cases appears to be on the rise.
For example, the UK accountancy firm Crowe Clark Whitehill found that the number of loss measurement exercises due to fraud have increased nearly exponentially since 1997. Health insurance fraud plays a part in this increase.
In 2016, the US Justice Department was reported to have charged over 300 medical professionals with fraud. The total amount of USD 900 million further highlights just how significant the problem of health care fraud has become.
While considerable in its own right, the figure above likely amounts to just a drop in the bucket. For example, the Coalition Against Insurance Fraud estimates that healthcare fraud, of which health insurance fraud is included, amounts to "tens of billions of dollars a year."
These losses from fraud often result in not only a higher cost of care, but subsequently higher insurance premiums.