Across Asia, employers are experiencing health and benefits programme cost increases as high as 45% (per the MMB Asia Total Health and Choice 2013-2014 Survey) annually in some markets, impacted by high inflation, even higher medical cost inflation and health and benefits premium increases.

Many employers are also balancing differing employee demands that come with having a multigenerational and ageing workforce, and managing other challenges, such as an increasing incidence in chronic disease, changing local healthcare regulations, and a demand for more competitive benefits.

Despite a backdrop of increasing costs, a high percentage of employers across Asia are not investing aggressively enough in health management programmes, don’t understand the root cause of health issues, or are able to draw a meaningful parallel between employee health and overall operating costs.

Given such a complex operating environment, are there quick fixes employers in Malaysia can institute to manage healthcare costs in the short-term to address local cost drivers and challenges, and how can they ensure long-term programme sustainability?

In Malaysia, employers are facing steep cost increases in providing medical care to their employees.

New medical technologies, changes in healthcare legislation, and an increased prevalence of lifestyle-related health conditions are all contributing to significant increases in the cost of keeping employees healthy and productive.

With recent changes to private healthcare legislation now is an appropriate time to review existing programmes and adopt a holistic approach to employee health benefits design – one that not only addresses the cost side of the equation, but which also helps achieve a healthier and more productive workforce.

Across Asia, employers are experiencing health and benefits programme cost increases as high as 45% annually in some markets.

A closer look at the key cost drivers in Malaysia reveals that advancing medical technologies, a changing regulatory framework, a lifestyle leading to chronic diseases and an ageing population have the biggest impact on benefit programme costs.

Let’s take a look why.

Advancing medical technologies

Advances in medical technologies are resulting in new types of treatments that yield greater success rates, entail lower risks, and enable quicker recoveries. Additionally, minimally invasive surgeries and robotic surgeries are increasingly favoured over traditional open surgeries.

However, these new technologies and advanced techniques are much more costly than traditional procedures and are passed onto the employer, increasing premiums year on year.

The changing regulatory framework

Amendments to the Malaysian Private Healthcare Facilities and Services Act 1998 have already resulted in medical care cost increases.

For example, consultations with general practitioners, which used to cost between MYR10 and MYR35, now cost between MYR30 and MYR125 (per The Star Online: APHM-Healthcare Costs May rise, Dec 2014), and this trend is expected to continue.

Lifestyles that lead to chronic diseases

Chronic diseases, such as diabetes and hypertension, which used to be characteristic of the older generation, are increasingly prevalent among younger employees in Malaysia.

Consultations with general practitioners, which used to cost between MYR10 and MYR35, now cost between MYR30 and MYR125, and this trend is expected to continue.

Many chronic diseases are the result of individuals’ lifestyle choices, but are exacerbated by workplace conditions such as stress and sedentary jobs.

In 2011 the National Health and Morbidity Survey found that 27.2% of Malaysians aged 18 and above were suffering from obesity.

Employers feel this cost not only through the increasing utilisation of benefits and rising claims, but also through increasing absenteeism.

Ageing population

Malaysians aged 65 years and above are projected to increase three-fold from 2010 to 2040.

In 2030, when 15% of its population reach aged 60 and above, Malaysia will become an “ageing nation” (per the Sun Daily, Malaysia, Mar 2015).

Employers will inevitably be impacted by increasing medical costs resulting from the care of a more elderly workforce.

Opportunities for employers

Despite multiple cost pressures there are still many opportunities for employers to achieve short and long-term savings, including programme realignment, targeted disease management, effective vendor management, funding arrangements and claim and service audits to quickly tackle rising costs.

A more sustainable benefits programme can be achieved with an on-site clinic and services, fostering a healthier workforce, and understanding which initiatives are driving real return on investment through a data-driven approach to benefits design and management.

This content has been brought to you by Mercer Marsh Benefits. The author is Ho Mun Kiat, leader of Mercer Marsh Benefits in Malaysia.

He can be reached at +603 2302 8585 or MunKiat.Ho@marsh.com

For greater insights into immediate (quick) and sustainable (longer-term) opportunities for employers, log onto http://bit.ly/MMBQuickFix.