Allianz Warns of Importance of Long-Term Protection as Medical Inflation Drives Up Healthcare Costs

Medical inflation is one of the causes of rising healthcare costs in recent years. In Indonesia, medical cost increases have outpaced the national economic growth rate of approximately 5%, indicating healthcare service fees are rising significantly faster than the average citizen’s economic capability. This has heightened public concerns about the sustainability of their health coverage, particularly regarding insurance affordability amid rising disease risks and treatment costs. Rising healthcare costs are also evident in increased health expenditure in Indonesia. World Bank data shows per capita health spending rose from approximately $118 in 2019 to $132 in 2023, reflecting growing healthcare needs and treatment costs over recent years. This trend is reflected in Allianz Indonesia’s data from 2020 to 2025 on average case costs for various illnesses: stroke up 169%, heart disease 219%, cancer 179%, dengue fever (DBD) 183%, and typhoid 116%. This has led many to become more selective in managing healthcare spending, including choosing sustainable health insurance to maintain peace of mind when facing unexpected future health risks. From the insurance industry’s perspective, medical cost increases driven by medical inflation have prompted adjustments in health protection costs. This is one measure taken to ensure coverage benefits remain viable for customers amid rising medical inflation. ‘Medical cost increases do not only affect hospitals or the healthcare industry but also influence how people prepare their financial protection. We consistently advise clients to regularly review their coverage to ensure optimal health protection,’ said Cheang Khai Au, Chief Product Officer at Allianz Life Indonesia. He stressed that there are several key considerations for the public to maintain long-term health protection readiness, including: