Medical Inflation Continues to Rise, Here’s What Insurance Customers Need to Do

JAKARTA – The International Monetary Fund (IMF) noted that global inflation fell from 6.8% in 2023 to 5.9% in 2024. However, this is not the case with inflation in the health sector, which continues to increase, driven by rising raw material costs and technological advances that have pushed up the price of medical care and medicines in hospitals and other health facilities.

The Mercer Marsh Benefit (MMB) Health Trends 2024 research report published by Mercer, one of the world’s leading HR consulting firms, states that medical inflation, especially in Indonesia, continues to rise to 13%.
The increase is higher than the projected trend of rising health costs in Asia, which is 11.4%.

Responding to this, financial advisor Andhika Diskartes said that in the midst of ongoing medical inflation, owning health insurance products is even more important. This is because owning health insurance products can help maintain the financial stability of yourself and your family in the face of economic uncertainty and increasing medical costs.

Based on the results of the 2023 National Economic Survey (Susenas) conducted by the Central Statistics Agency, it was stated that 61.8% of respondents used health services from their own pockets (OOP or out of pocket). In fact, WHO recommends that the OOP figure is no more than 20% in a country. OOP is an indicator to ensure that people’s financial protection is maintained and prevent excessive health spending because it is protected by insurance.

“Health insurance provides much-needed financial protection when facing life risks such as serious illness or accidents,” he said in a written statement, Wednesday (14/8/2024).

Andhika gave an example, if someone has allocated Rp15 million per year for health insurance, then at the same time he has lightened the burden if at any time he needs medical treatment through a claim for coverage that is agreed upon at the maximum amount. “In other words, you can avoid the risk of draining your savings or assets when you have to pay for high medical costs,” he explained.

On the other hand, medical inflation encourages the insurance industry to adjust insurance costs or premiums (repricing) that must be paid by customers. This adjustment is a common thing that does not only occur in the health industry. In the insurance industry, he said, repricing is not only a reaction to increasing health risks that result in higher claims, but also as a form of anticipation of medical inflation that tends to increase from year to year. “The goal is to ensure that health insurance customers always get protection into the future,” he said.

Meanwhile, from the customer’s side, he continued, repricing does trigger a dilemma. Because, on the one hand, it increases the amount of routine customer expenses. But on the other hand, they want to keep the protection running optimally and sustainably. Related to that, according to Andhika, customers can take several steps to respond to it.

First, allocate funds to stay insured. Andhika appealed to customers to keep their health insurance policies active by setting aside funds to pay premiums regularly. By paying health insurance premiums regularly, he said, customers are guaranteed to still be able to get optimal protection when they need medical treatment. Andhika added that basically the coverage value of insurance is much greater than the total premiums that are routinely paid.