A Swiss Re AG study shows that the so-called health protection gap in 12 Asian markets reached US$1.826 trillion in 2017, with 40 million households going without needed medical care to avoid financial stress.

The shortfalls arise because of gaps between the cost of medical bills and the amount covered by either insurance or government and social security spending, and can lead to people cutting back on other spending or dipping into savings, or going without coverage.

"What we know is that medical inflation is always outpacing general consumer price index inflation and that really suggests that the gap will widen," said Sohila Kwan, director and head of health and medical solutions at Swiss Re, at an Oct. 5 Hong Kong press briefing. "We do see the trend particularly in increasing pressure from governments on public healthcare spending."

China and India represent US$805 billion and US$369 billion of the health protection gap, respectively, because of their large populations and high out-of-pocket healthcare costs. Swiss Re noted that patients are required to stump up 65% of the cost of medical care in India and 30% in China, compared to figures of 10% to 14% in mature markets globally.

Emerging markets represent about US$1.377 trillion of the health protection gap, yet even in more mature markets, shortfalls can be significant. Japan and South Korea constitute US$218 billion and US$144 billion of the gap, respectively, Swiss Re said.

"[Mature markets] still contribute to a big part of the gap," Kwan told reporters. "We certainly feel opportunities there to develop more products that are more targeted to [consumers'] actual family need and situation."

Kwan pointed to finding ways of supporting customers "beyond just the claim payments to [playing] a role to help them improve their health back to a better status."

The report said insurers should work with governments, healthcare providers, academia and communities to offer innovative protection solutions to close the gap. It recommended offering simple products to target at low- to medium-income segments, to "achieve a baseline of resilience," and broadening and deepening coverage for medium- to high-income existing policyholders who are underinsured.

Among the 12 Asian markets surveyed, Thailand has the lowest health protection gap at US$6 billion, which Swiss Re attributed to its subsidized universal healthcare program. The gap as a share of household income is largest in Vietnam (22%), Malaysia (20%) and India (18%).

Swiss Re also said that based on the gaps in Asian emerging markets, it estimated the total gap in all emerging markets to be about US$2.9 trillion, including US$705 billion in Latin America and US$341 billion in the Middle East, Turkey and Central Asia.