Overcoming the Unprecedented ASEAN Healthcare Spending

Compared to the global average, the overall healthcare spending allocation of ASEAN 6 countries are at a relatively low level.

October 2018 , by

The ASEAN 6, which consists of countries with economic dominance over Southeast Asia, is facing a public health budget issues as the result of unprecedented rise of health-care costs that are occurring across the globe. At the current growth rate, these 6 countries will experience a near-double healthcare spending by 2025 if compared with today's health care costs, with the amount of increase around USD 320 billion. 

Our paper, "The USD 320 Billion Healthcare Challenge in ASEAN", suggests that the high rise of healthcare around ASEAN 6 spending is due to the rapid demographic transition between the countries. About 21.1% of people in Southeast Asia will be 60 years old and above in 2025, driven by reduced fertility rates and higher life expectancy. High smoking and metabolic problem rates that occur in the working population also play major roles in the increment of cost, understanding that this population will turn into an unhealthy elderly population.

Compared to the global average, the overall healthcare spending allocation of ASEAN 6 countries are at a relatively low level. Nevertheless, the governments of ASEAN 6 countries are unlikely to set aside a higher proportion of national budgets to healthcare spending. This is due to the fact that these countries are more likely to allocate their budget towards a crucial sectors such as massive infrastructure plans and economic stimulus, as the result of trade wars and tensions in the South China Sea. 

ASEAN HealthcareIt is worth noting that it is not too late for ASEAN 6 countries to become the leading nation on cost efficiency of healthcare. Referring to the healthcare cost efficiency curve, ASEAN 6 countries, excluding Singapore, are in the ‘middle field’ which spend lower spending compared to the over-spenders and have a higher life expectancy of under-developed nations. These countries are in an ideal position to be creating a cost-efficient healthcare, as if they spend more budget to increase life expectancy they can be the equivalent of global healthcare leaders.

However, the policy makers from across these countries must also put their attention beyond life expectancy. The improvement of healthcare in recent years has helped the ASEAN 6 countries to perform well in reducing the Years of Life Lost, but at the same time Years Lived with Disability  has increased and incurred higher healthcare spending.

Overcoming the Rising Challenges

Despite the soaring challenges, ASEAN 6 could implement strategies mentioned in our paper, The USD 320 Billion Healthcare Challenge in ASEAN, to aim for a better healthcare system and reduce the health cost problems. Our paper recommends three levers that policy makers can consider. Policy makers can generate new sources of healthcare funding through the taxation of unhealthy goods such as tobacco and alcohol, and also sugar and salt which currently are not being taxed at all. Policies around streamlining healthcare spending and reducing administrative bottlenecks can also be done, for instance by removing redundant reviews on drug approval processes. 

Businesses can also take the valuable opportunity assisting policy makers to overcome these problems. Healthcare industry players, such as private hospitals, pharmaceuticals, and medical devices companies can partner with policy makers by offering the effective healthcare products and services. Opportunities also exist in other healthcare services such as retirement and care homes. With the high penetration of technology among the population, the offering of digital healthcare can also be seen as the more effective approach in battling the healthcare problems.

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