Health Care in Asia Outpaces Inflation

Driven by aging populations and a thirst for better medical care, health spending has resumed its upward trend, rising at its fastest pace in seven years, according to a series of private and public studies, with health spending in Asia outpacing inflation by a wide margin in 11 countries.

What’s more, according to a survey of medical trends around the world by Mercer March, the global health consulting firm, the aging of society is projected to increase the prevalence of noncommunicable diseases – chronic diseases like cancer, heart problems, diabetes, etc. by 40 percent across the region by 2030.

According to an analysis by the United Nations-backed Organization for Economic Cooperation and Development (OECD), “long-term care was the fastest-growing area of health spending” prior to the 2008-9 global financial crisis. But while growth has slowed, it remains relatively strong. Although the OECD didn’t list the causes, aging populations are one reason, and a second is the loosening of familial bonds in Asia, with relatively fewer families keeping the aged in their homes and instead relying on long-term care facilities.

According to the OECD, the United States easily retained its place as the most expensive country in the world for healthcare, with health spending at 17.2 percent of Gross Domestic Product, far ahead of Switzerland at 12.3 percent in second place, and France, at 11.5 percent, at third. Per-capita spending on health in the United States has topped US$10,000 for the first time, with the rest of the 35 member countries in the OECD averaging about 40 percent of that figure.

In Asia, as emerging countries become richer, their spending on health has also zoomed up at an unsettling rate according to a study by the Mercer March health consulting firm, with health spending in every one of 11 countries surveyed running far ahead of inflation. Spending on health in Indonesia skyrocketed by 14.3 percent, outpacing inflation at 3.8 percent by nearly four times. The Philippines was second at 12.4 percent annual increase compared with an inflation increase of 3.2 percent. China’s trend rate, at 9.5 percent, was nearly six times inflation at 1.6 percent.

“The rise in prevalences of these diseases – which include diabetes, cancer, chronic respiratory disease and cardiovascular disease, is estimated to increase insurance premiums by up to four times, threatening the affordability and viability of healthcare insurance.”

The big problem, according to the March study, is non-communicable diseases – heart afflictions, diabetes, etc., which are responsible for 60-90 percent of deaths each year in the Asia-Pacific region. Increasingly according to the report, increasingly more people with such diseases contribute to the growing burden of disease facing the region. For example, in 2015, the region was home to more than 231 million diabetics, almost triple those June 15 years earlier, as weight gain and bad diets take their toll.

“Importantly, the chronic nature of non-communicable diseases creates a persistent problem for societies,” according to the report. “To measure the burden of disease, epidemiologists and economists use metrics like years of life lost (YLL) or disability-adjusted life years (DALY), which measures the number of years lost due to ill-health, disability or early death. While the prevalence of NCDs varies across the Asia Pacific region, they account for the majority (65 percent) of disease burden on average, with Australia topping the charts at 87 percent of its total DA

The most significant reason for most cost increases selected by insurers across the globe is new and expensive technology. Regionally, the high cost of pharmaceuticals led the list in Latin America and Africa. According to the OECD, several countries have sought to cut drug prices – none of them the the the United States, which continues to have the highest drug prices in the world, primarily because of a Bush-administration law forbidding negotiation on drug prices for Medi-care, the country’s medical insurance program for the elderly.

Other countries have ordered cuts in manufacturer prices and limited margins for pharmacists and wholesalers, introduced compulsory rebates, delisted some pharma companies and encouraged the use of generics.

Patent expiries for a number of blockbuster drugs contributed to the fall in prices in recent years, once again except for the United States, where drug companies have used subterfuges to renew patents on some drugs by changing the formulary slightly to list existing pharmaceuticals as newly introduced ones.