PHILIPPINE healthcare benefit costs may post double-digit growth for a third straight year in 2025 due to increased use of health services amid the higher frequency of diseases and rising prices and fees related to medical services, global advisory company Willis Towers Watson plc (WTW) said.

The WTW Global Medical Trends Survey for 2024 showed that Philippine gross medical insurance costs are expected to increase by 18.3% this year, slightly slower than 19.3% in 2024.

Still, this is the second fastest growth projected among Asia Pacific markets following Indonesia’s 19.4% and would mark the third consecutive year of double-digit increases, coming from 17.9% in 2023.

“While the trend may be slightly cooling from 2024, it is projected to remain elevated over the longer term,” WTW said in a statement. “Medical inflation in the country has been hovering between 15% and 18% over the last three years.”

The 2025 forecast for the Philippines is also higher than the global average of 10.4% and the Asia Pacific average of 12.3% for 2025.

“Although reports indicate that HMOs (health maintenance organizations) are recovering in the first half of 2024, ongoing negotiations between two HMO associations and various doctor groups regarding a potential 80% to 150% increase in professional fees are still driving the projected double-digit medical inflation projected for 2025,” WTW Philippines Health & Benefits Head Maria Nelissa Abrera-Badal was quoted as saying.

The HMO industry posted a net income of P800.86 million at end-September 2024, rebounding from the P2.15-billion net loss in the prior year, latest data from the Insurance Commission showed.

This was driven by a 22.5% increase in revenues to P59.65 billion. Meanwhile, the sector’s total expenses increased by 15.75% year on year in the period due to a 14.05% rise in healthcare benefits and claims paid to P46.67 billion.

WTW said the “substantial” increase in claims and benefits paid out by HMOs has caused the sector to adjust its pricing assumptions annually amid rising utilization.

Claims frequency has rebounded in the Philippines, it added, with the cost per claim also rising mainly due to higher prices of medical services and procedures.

It said the increase in healthcare costs in the Philippines have been driven by both internal and external factors.

“Internal drivers of medical costs are perpetuated by behaviors of healthcare providers and insured members. The top factor reported is medical practitioners recommending too many services (79%), including overprescription of both medications and diagnostics, which results in unnecessary and excessive costs,” WTW said.

Meanwhile, among the external factors cited by insurers as the main healthcare cost drivers are “higher cost of new medical technologies (73%); the continued pressure being placed on private healthcare providers as public healthcare systems are overwhelmed (40%) which leaves many employees to turn to and rely on private medical providers; as well as the lack of cost sharing in plan design (39%).”

“Continued pressure is being placed on private healthcare providers in the Philippines. Although the rise in availability of telehealth and other virtual care offerings is expanding access to healthcare in the Philippines, it also contributes to increasing costs. Coupled with the shortage of manpower in the healthcare sector in the country, the double-digit trend of medical cost increases remains and is expected to rise in the near future,” Ms. Badal said.

“Sustainable solutions and joint efforts from individuals, healthcare providers and government are needed to build a more resilient and cost-effective healthcare system to ensure that quality care remains accessible to all at an affordable price. Cost sharing aimed at apportioning medical costs between insurers and members can also help to manage costs. This will help to minimize overuse and overprescription of care,” she added. — A.M.C. Sy