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Health crisis can impoverish underinsured Filipinos

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Making a holistic insurance coverage vital

Historically, even among those with disposable income, Filipinos have always been underinsured—and the consequences they suffer have been nothing short of catastrophic. Putting this urgent need for insurance in sharp perspective, more than ever before, is the still ongoing COVID-19 pandemic. These days, insurance is often the difference between life and death, health or lingering illness, and financial security or destitution.

Even in pre-COVID-19 Philippines, conditions were already alarming. A CNN Philippines report estimated that fully 60% of all Filipinos who die annually have never even spoken with a doctor or checked into a hospital. But that is far from the only problem. 

Medical impoverishment

As one of the most recognized global brands and one of the largest and fastest growing names in life and non-life insurance in the country, AXA monitors Philippine healthcare closely. AXA Philippines President and CEO Rahul Hora explains the grim reality: “Too many Filipinos are apparently only one healthcare crisis away from poverty. It’s so prevalent that there is actually a term for it: ‘medical impoverishment.’ This is a catastrophic healthcare crisis in which the resulting out-of-pocket (OOP) healthcare spending causes a person who was previously not poor to become impoverished. In the long term, the insurance we provide at AXA can be the all important difference between sickness and death, or financial security and financial ruin. AXA provides the comprehensive insurance that protects that person from risks as he matures and his status changes. We also provide the public, especially the underinsured, the accurate and correct information they need about insurance so they can make informed decisions about their security and welfare.”

Even prior to COVID-19, medical impoverishment was a growing problem. The Philippines Health System Review Health of 2018 cites a study: “2013 shows that the prevalence of impoverished persons due to OOP spending has climbed steadily from 0.6% in 2000 to 1.0% in 2012. The 2012 proportion means that, given a Philippine population of around 100 million, 1 million non-poor people were impoverished due to high OOP payments in healthcare.”

Apparently, things have not improved since the study was conducted. Just last year, the first year of the COVID-19 pandemic, healthcare spending in the Philippines increased to 5.6% of the country’s GDP, up from 4.7% in the previous year, More telling Is the fact that 44.7% of this figure was out-of-pocket spending. Soaring costs of COVID-19 hospitalization, hesitancy to seek healthcare or go to a hospital for fear of healthcare acquired infection (HAI), and fully occupied hospitals imply that during this crisis, the situation now is likely far worse than in 2012. 

Given the increased likelihood of the nightmare scenario that medical impoverishment poses, it is no longer really a question of whether Filipinos can afford insurance. What they should ask themselves is whether they can continue to afford to be underinsured.

If there has been a silver lining to the COVID-19 pandemic, it’s that more than at any time in history, Filipinos are becoming acutely aware of the consequences of being underinsured. Right now, those who have become aware of this dire situation are actively looking for insurance options. 

Common insurance mistakes

Recognition of the importance of insurance and knowing the suitable kind of policies that will meet one’s needs are two very different things. For instance, it is all too common for Filipinos to mistake personal accident insurance with life insurance.  They don’t understand that personal accident insurance only covers death or injury from accidents, and not other possible causes such as diseases or health conditions. Insurance companies have to explain the difference often to confused policy beneficiaries.

This lack of knowledge causes many Filipinos to be more than adequately covered in one area, but lacking in others. A lot of employees who have HMO coverage opt not to get health insurance and then choose higher-paying life insurance or more comprehensive car insurance—only to find out the hard way that their HMO coverage has limitations. For example, it does not replace the money they could be earning if they weren’t sick, and which they really need, now that they have gotten ill.

Hora expounds: “Few understand the individualized nature of insurance. There are several variables to consider when assessing the types of insurance a person needs. Aside from aging, people acquire assets such as cars that can be wrecked or houses that can burn down; for most, acquiring such assets was likely the work of a lifetime, and they are virtually irreplaceable. People get married and have kids, so their health and income become even more crucial and thus need better coverage. ”

Assets are not limited to personal ones. One example is a business enterprise wherein a lot of money, time, and effort have been invested. Insuring a business can cushion it against a hard economic blow. As the COVID-19 era showed, the lack of insurance leaves a business too vulnerable to financial loss or even closure. Many companies that shut down during this time were not necessarily small or new. 

Travel also needs to be insured as it incurs considerable expense. It is an experience where many things can and often do go wrong, from delays, lost luggage, cancellations, to—again and as we learned during the pandemic—illness and other medical complications. All of these damages can in fact be covered by travel insurance.  

With many-at-risk assets that can be insured, it is preferable, simpler, and more convenient to talk to a single agent who can assess one’s needs, and give the most complete coverage under a single reputable company. With its global stature and wide range of products for life, AXA provides all the insurance any Filipino might need under one roof.  Aside from reducing risks, it can also show how insurance can become a long-term investment and savings that can shield the insurer during hard times. To learn about your uniquely individual insurance needs, book an online appointment with AXA: https://www.axa.com.ph/appointments

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