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The health protection gap in Asia reached US$1.8 trillion in 2017, affecting 40 million households, and is expected to continue growing, research by Swiss Re indicates.
The report, titled “Asia’s Health Protection Gap: Insights for building greater resilience”, defined the gap as the “amount of insurance coverage needed to avoid the financial stress arising from unforeseen direct medical expenses.” These expenses are not covered by other payers such as insurance, social security, or government funding, thus forcing families to take out money from their daily living funds or savings.
The study compared the health protection gap across 12 Asian markets: mainland China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Thailand, Taiwan and Vietnam.
The largest health protection gaps were in mainland China (US$805 billion) and India (US$369 billion). This was due to both countries’ huge populations and low levels of affordability. Both countries have a high share of out-of-pocket expenses, at around 65% in India and around 30% in China. These are much higher than that of mature markets globally, which are at 10% to 14%. In addition, China and India represent over three-fourths of total non-treatment cases in Asia, affecting around 32 million households.
Swiss Re also found that younger people in emerging markets face a higher amount of financial stress than other age groups, with more than half of the gap (53%) attributable to 18- to 40-year olds. This is likely due to a lower level of understanding of the need for insurance, resulting in lower rates of purchase in this age group. Lower income levels and overconfidence about their health conditions were also seen as factors.
Chronic diseases are one of the major drivers of the gap at 46%. The Philippines (77%), followed by mainland China (55%) and Hong Kong (53%) had the highest number of households dealing with lifestyle-related diseases, particularly diabetes, hypertension, and high cholesterol. The prevalence of chronic conditions is expected to worsen as urbanisation, ageing, and income growth continue.
Overconfidence regarding one’s health is another factor contributing to the large protection gap. The study found that 60% of respondents described themselves as being healthy, but around one third of them said they did not exercise more than once a month. Meanwhile, 61% of daily smokers considered themselves healthy.
Self-reported healthy respondents are more likely to let their medical insurance lapse, the report said. This trend is common in emerging markets where 53% of self-reported healthy respondents have allowed their insurance to lapse in the past, compared to 41% of self-reported unhealthy respondents. One possible explanation posited by Swiss Re is that current medical insurance offerings fail to add value to self-reported healthy customers.
Wearables and health and fitness apps are becoming more common in the region, with 19% of respondents owning a wearable device, a health and fitness app, or both. The vast majority of consumers (83%) are willing to share their fitness data with an insurance company.
According to Swiss Re, the technological development and easy access to activity data encourages more consumers to participate in health management programmes, which means insurers must develop innovative solutions aimed at addressing specific health protection needs.
“Although Asia has been growing rapidly and people are becoming richer, access to quality and affordable healthcare continues to be a challenge in our society today,” said Robert Burr, Swiss Re’s managing director and head of life & health client markets in Asia. “This is unacceptable in this day and age.
“This study identifies the various factors driving the health protection gap across Asia. It’s time that all the stakeholders - governments, healthcare providers, insurers/reinsurers and non-profit organisations – work together to find solutions.”
