Magazine

Read the latest edition of AIR and MEIR as an Interactive e-book

Dec 2024

Vietnam: Insurers battle stubbornly high medical inflation

Source: Asia Insurance Review | Aug 2018

Vietnam Life & Health

With the annual medical inflation rate in Vietnam hovering near 20% for the past several years, given the imbalance in supply and demand in the private healthcare system, insurers are pessimistic about it improving any time soon. This is imposing significant pressure on underwriting margins and putting benefits sustainability at risk. 
 
Vietnam has both the highest rate of medical inflation and the highest Aon Medical Inflation Index (AMII) across the region, says Aon in its inaugural Asia Healthcare Trends Report 2017/18. The country’s AMII score of 164.5 is almost double the regional median score of 82.7. The index is actuarially modelled on a market’s 2017 and 2018 medical inflation estimates along with their three year market inflation outlook. 
 
Whilst medical inflation has softened in 2017 to an average of 16.7%, insurers expect it to quicken to 19% in 2018 and forecast it to increase significantly over the next few years.
 
Insurers participating in this Aon study were unanimous in their view that outpatient costs are the primary driver of medical inflation in Vietnam. 
 
On the inpatient side, hospital room and board charges in Vietnam are recognised by insurers as being their top cost component. The reason for this is driven by the economic fundamentals of supply and demand. There is currently insufficient competition to rein in cost inflation. 
 
Whilst drugs/medications only ranks third out of the top five inpatient costs, there was consensus amongst insurers that this cost component is experiencing the highest rate of inflation. Drug cost inflation in Vietnam is fuelled by the fact that 90% of national pharmaceuticals expenditure is reliant upon imported goods, further compounded by currency fluctuations.
 
In addition, as the Vietnam medical insurance market is immature and dominated by local players rather than international carriers, it is perhaps not surprising to find that cost management initiatives related to tracking inpatient readmission for chronic illnesses, working with healthcare providers on chronic disease management programmes and providing clients with claims reporting for cost management purposes all attracted only 33% market support.
 
In assessing what their clients are doing to manage demand for healthcare services, popular initiatives noted by insurers included imposition of premium co-pays along with specific benefit sub-limits. Co-pays for utilisation of non-network providers were also popular. On the supply side, the most common initiative was restricting specialist access to GP referrals. Telemedicine and second-opinion services are emerging themes.
 
Notably, private health insurance has shown the highest growth rate over the past few years within the insurance market. It was only in 2011, that private medical insurance was officially recognised as a specific insurance product by the ministry of finance. A 
 
| Print
CAPTCHA image
Enter the code shown above in the box below.

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.

 

Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.