WEALTH

FOCUS
For its part, Indonesia launched the world’s
largest single-payer healthcare insurance
program in 2014. The aim of the program is
to provide healthcare to all 247 million citizens
by 2019 at an annual cost of $15 billion – about
$60 per head.
THE GOVERNMENT DILEMMA
What is driving improvements is the economic
development of low- to middle-income countries.
The World Bank estimates that healthcare
expenditure rose in East Asia (the countries
stretching from China to Papua New Guinea)
from 3.3 to 5.3% of GDP between 1995 and 2014.
Although still only half the expenditure of the
European Union and less than a third of North
America, this will continue to rise.
The reason is the further expansion of
social security programs, as well as individual
spending. According to the OECD, as Asia
becomes more prosperous, the middle class
will balloon from 525 million in 2009 to 3.2
billion by 2030. As the middle class becomes
more affluent, it will want better healthcare,
particularly to address the multiple diseases
that accompany rising life expectancies. It is
then, when chronic, old-age-related conditions
hit families and friends, that people realize the
greatest gift we all have is good health.
This poses a problem: while Western
countries have had up to 100 years to create
broad healthcare safety nets for citizens, Asia
has only a few short decades to use its
demographic bounty before it becomes old (see
PROJECT M #21, “A title no country wants”).
Governments still in the process to deliver
basic medical services may not be able to
afford to devote limited public funds to the
construction of costly healthcare services
along Western lines. As the Indonesian polio
outbreak highlighted, even when healthcare is
within reach, people may not access it. Reasons
range from overcrowding to insufficient
resources; some public schemes do not cover
informal workers. Limited coverage and copayments
mean people cannot always afford
necessary medical services.
The scheme in the Philippines, for example,
does not cover drugs: patients must choose
between paying out-of-pocket expenses and
going without. Not infrequently, such costs
can have severe consequences. People use
savings, sell assets such as their homes, or
borrow to meet medical bills. If the illness hits
the head of the family, it usually means loss of
income. All of this can push families into longterm
financial distress. Limited government
funds are better spent providing
comprehensive basic universal healthcare
services for all citizens. To address out-ofpocket
expenses, government schemes have to
balance the need for indemnity covers against
the available funds by focusing on delivering
core medical requirements at responsible
quality standards. The target should always be
to improve the health status of the population
and prevent people from falling into poverty
through illness.
VOLKER STÜVEN
is the regional head of
Health Business at Allianz
Asia Pacific (AZAP) based
in Singapore. In his
previous positions, he
was general manager of
Allianz Life & Pension in
Turkey (2012-2014).
Volker studied economics
and holds a PhD from the
Kiel Institute of World
Economics
GREATER AFFORDABILITY
The healthcare demands of citizens over and above a basic layer of
healthcare can be met through private insurance. Up to now, private
health insurance has played a minor role in most Asian markets, with
governments providing varying degrees of public healthcare.
Yet experience in countries around the world shows, that as the
middle class increases its buying power, people are prepared to use the
risk-pooling mechanism that insurance provides to protect themselves
and their families against potentially high healthcare costs, and secure
broader and better coverage. This process is already taking place, for
example, in Malaysia and Thailand. Both countries have developed a
well-regarded healthcare infrastructure supported by public financing.
Both countries are also seeing continual strong growth in private health
insurance and an expanding private healthcare sector.
This trend will see private insurance uptake continue to grow in
Asia. Growing numbers of people will seek higher quality healthcare
with ready access in preference to facing long waiting lists at public
facilities. They will want insurance solutions and services to protect
themselves and support their well-being throughout their longer lives.
And they will seek to insure themselves against out-of-pocket expenses
that can arise from special critical illnesses where treatments can
devastate even prosperous, middle-class families.
MULTI-PILLAR HEALTH COVERAGE
The development of private health insurance is complementary with the
aspiration for universal healthcare. A multi-pillar approach with a
voluntary private health insurance component can provide strong
support to the development of a public layer that is well-regulated and
adapted to local needs. Asian governments are realizing this and are
encouraging greater use of private health insurance through market
liberalization. As populations grow wealthier, and become more aware
of the risk pooling benefits of insurance, uptake will increase even in the
mass-affluent segment.
16 • Allianz