• This is the third research brief in a three-part series that looks at Asia in the ageing century, with a particular focus on the countries of East and South-East Asia.
• The context is outlined in the first brief, which describes population, urbanisation and social trends in the region. Specifically, it notes that population ageing in East and South-East Asia is happening faster and at a lower level of economic development than in the West. Many Asian countries now have a decade or so to prepare for the final stages of demographic transition. Parts II and III of the series focus on two areas of economic activity which are both pertinent to population ageing and have enormous scale: provision of retirement income (covered in Part II) and of healthcare (outlined in the present brief).
• As Asian societies become wealthier and older they will demand more of their health systems. This translates to extending health insurance coverage to a broader cross- section of the population, and offering reimbursement for a greater proportion of costs on a larger package of benefits. China has enrolled 1.2 billion people into the health insurance system within the last decade but in some provinces benefit packages are lacking. Malaysia achieved universal health coverage in the 1980s, but in 2004 key medicines were only available in a quarter of public health facilities.
• East and South-East Asian governments currently have the fiscal capacity to keep expanding health systems, but to avoid the excessive cost growth seen in the West they will need to employ various micro, macro and demand-side measures – heeding the successes and failures of reforms within the region and elsewhere.
• An important area for healthcare is the epidemiological transition that comes with ageing societies, where the relative prevalence of non-communicable diseases increases. Health packages in Asia are yet to take a full account of this change.
• Health spending in the region was worth over US$1 trillion in 2010. On the financing side, private health insurance is still a niche market making up US$50 billion of spending, but recent growth has been high (e.g. 100% p.a. in China). On the provider side, the size and growth of the market will result in opportunities for pharmaceutical, medical device manufacturing and consumer health companies, as well as for operators of hospitals and specialised facilities. Some of that demand will spill over into the growing medical tourism market.
• At the level of the macro-economy, stronger welfare provision offers an opportunity to rebalance growth in the region by reducing excessive precautionary savings. So far, East and South-East Asian countries have been taking this opportunity but much remains to be done for healthcare systems to be fully ready for an ageing population.