Medical Inflation

Good news to PRUMyHealth customers of Prudential Cambodia!!! There is no repricing due to Medical Inflation for year 2023. 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 2023 Global Medical Trends Survey published by Willis Towers Watson (WTW), reveals that after rising from 8.2% in 2021 to a higher than anticipated 8.8% in 2022. The global gross healthcare benefit cost trend for 2023 is projected to remain at a high average of 10%. Likewise, the gross medical cost in Asia Pacific, the region where Cambodia resides, is projected to have around 10% inflation in 2023.

Also, under this survey, the increase in medical costs are expected to continue accelerating beyond 2023 with over three-quarters of health insurers (78%) anticipating higher or significantly higher increasing medical cost trend over the next three years.

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

*This survey tracks medical costs from global network of 257 insurers in 55 countries.

**Net of general inflation (inflation rates from IMF World Economic Outlook, Apr 22)

†Global and Latin America numbers exclude 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, despite the projected increase in Medical Inflation for year 2023 as specified above, after our review on Company’s portfolio experience, Prudential decides to absorb the increased cost and will not adjust premium driven by medical inflation for policies with Policy Renewal Date from 15 July 2023 to 31 December 2023.

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. 2023 Global Medical Trends Survey. (2022, October 12). wtw. 2023 Global Medical Trends Survey - WTW (wtwco.com)