Medical Inflation

Good news to PRUMyHealth customers of Prudential Cambodia!!! There is no repricing due to Medical Inflation for year 2024. Please read below for more information on Medical Inflation.

What is Medical Inflation?

Medical Inflation is the year-on-year increase in medical costs due to an increase in demand and/or prices of relevant medical goods and services, including pharmaceuticals and medical devices. Medical Inflation is influenced by various factors, such as medical trends and developments, population aging, lifestyle changes, and supply and demand.

Why does Medical Inflation happen?

Some of the main drivers of medical inflation are:

Medical advancements

Because of continual advancements in medical technology and medication, the quality of healthcare has improved considerably over time. However, this has also translated into higher medical costs to fulfil the demand for quality health professionals and medical equipment.

Higher demand for health services

The growing and aging population increases the demand for healthcare services, especially for chronic and complex conditions that require more care and intervention.

Changes in cost per person

Incremental changes in cost per person trigger changes in the unit cost of specific ongoing medical treatments and procedures. This change can come in the form of hospital consumable costs, specialist doctor fees, and even expenses like rent or property costs.

Unhealthy lifestyle choices

Non-communicable diseases like cardiovascular diseases and diabetes are a product of poor diet choices, occupational health and sedentary lifestyles. These conditions may require long-term treatment. Thus, exacerbating health costs incurred by individuals.

Changes in utilisation of health services per person

The utilisation of health services per person may vary over time as the health industry moves to newer and more costly treatments and medications. This change can occur due to the launch of new drugs and new-age technologies to diagnose and treat a disease which was earlier untreatable. Consumer behavior can also affect the utilisation of health services per person such as seeking more convenience, choice, and quality, as well as changes in the access and availability of healthcare.

Global and regional Medical Inflation Rate

As shown under Figure 1 below, the 2024 Global Medical Trends Survey published by Willis Towers Watson (WTW), reveals that after rising from 7.4% in 2022 to a higher than anticipated 10.7% in 2023. The global gross healthcare benefit cost trend for 2024 is projected trend to decrease to a global average of 9.9%. Likewise, the gross medical cost in Asia Pacific, the region where Cambodia resides, is projected to have around 9.9% inflation in 2024, which is largely in line with 2023.

Figure 1. Global Medical Trends, Global and by Region*:

*This survey tracks medical costs from global network of 266 insurers in 66 countries.

**The growth in medical costs is projected to decline further or remain unchanged in most regions in 2024.

***Net of general inflation

†Global and Latin America numbers exclude Argentina and Venezuela

Impact of Medical Inflation

Medical Inflation has a significant impact on the healthcare sector and the economy as a whole, as it increases the expenditure and affordability challenges for governments, insurers, providers, and consumers. It also affects the quality and accessibility of healthcare for different populations and regions.

Similarly, PRUMyHealth offered by Prudential is a health insurance solution which provide financial protection on the cost of medical treatment and procedures. High Medical Inflation would mean Prudential pay more to cover the costs of the same medical treatments and procedures. Sub-limit and Co-payment that are imposed under the product could help minimize the cost for the Company; however, the Company could still incur loss if the medical costs keeps increasing more than expected. In order to ensure sustainability in providing healthcare insurance to customers, there may be a need for us to adjust the premium to reflect the rising costs. The change in premium is subject to regulatory approval, and you will be notified on the premium change 30 days before the expiry date. The new premium will be effective starting from next policy anniversary of your Policy.

However, as the Medical Inflation is projected to remain stable for year 2024 as specified above and after our review on Company’s portfolio experience, Prudential decides not to adjust premium driven by medical inflation for policies with Policy Renewal Date from 01 January 2024 to 31 December 2024.

Note on Renewal Premium payment

Direct-Debit Payment Arrangement:

If you are currently paying your premium via direct-debit (premium deducted from your bank account), we will directly deduct the new premium for next Policy Renewal from your bank account. Please kindly let us know before policy expiry date if you do not want to renew your Policy.

Other payment method besides Direct-Debit: Please go to this link Payment_Method | Prudential Cambodia on how to pay your renewal premium.

Reference

1. 2024 Global Medical Trends Survey. (2023, November 28). wtw. 2024 Global Medical Trends Survey - WTW (wtwco.com)