What does the future of sustainable health insurance premiums in Thailand hold?
The health insurance market in Thailand is facing an awakening.
For years, health insurance companies rode a wave of relatively cheap medical costs in Thailand which resulted in largely sustainable health insurance premiums.
The increasing Thai middle class, combined with a growing expat community, meant there were significant numbers of people who were able to pay insurance premiums in order to access the great healthcare options Thailand has to offer.
Fast forward to post Covid times and the landscape is changing.
Successive years of double digit medical inflation is putting pressure on health insurers and ultimately policy holders whom the costs are passed on to.
Whist there are other factors impacting health insurance costs, medical inflation is the main market driver.
What will it take to return to sustainable health insurance premiums? Here we look at how the market can adapt going forwards, to return to a period of sustainable health insurance premiums.
1.Working with providers
It’s no secret that there are certain hospitals where costs are inflated once they know you have a good insurance policy.
Historically this was something insurers knew about and dealt with. However, when it happens en masse, it creates cost pressures.
Whilst cost containment measures have always been a focus area for insurance companies, going forward controlling both the procedures and the pricing offered by private hospitals will be an increased part of the insurers remit.
Examples of how the system can be abused include over prescribing medication and encouraging costly procedures where the standard medical practice methods are perfectly acceptable.
Another common issue in Thailand is the over admission of patients. This normally occurs when people hold inpatient coverage, and the hospital pushes admission for issues which can be treated on an outpatient basis.
This is particularly common in pediatric cases and a large reason why child premiums have been disproportionately impacted by premium increases.
2.Working with other insurers
Any one insurer on their own is unlikely to have much leverage in terms of working with hospitals in order to get a grip on the problems of overcharging and over utilisation.
If insurers work together, then all of a sudden the proposition changes.
By controlling networks, insurers can impact foot flow into the major hospitals. This will in turn strengthen their negotiating position when it comes to pricing and hopefully result in the sustainable health insurance premiums we all want to return.
Whilst this is something which appears not be happening at the moment, it could well be considered in the future if costs continue to escalate.
3.Increased policy holder responsibility
Encouraging responsible use of health insurance plans by policyholders will help to control premium increases going forwards.
Whilst pushing for that inpatient admission might feel like it’s the best thing to do, in practice you are contributing to the over admission problem.
Some insurers are forcing the issue. How?
- Adding compulsory co-pays/deductibles. We are seeing this especially with child premiums. Insurers are demanding that policy holders contribute to the costs. By doing so, they hope to drive usage down.
- Restricting the hospitals which policyholders can use. By removing overly expensive hospitals from your network, insurers encourage usage of the reasonably priced providers. This in turn over time will increase pressure on the overcharging establishments to reduce their costs.
We may also see further moves to increase deductible options and copays, and also no claims discounts. Both encourage responsible use of health insurance benefits.
4.Reducing the perks
The last few years has seen a reduction in the number of perks attached to health insurance plans.
For example, one of the major providers recently removed a price structure which offered free child premiums for the second child onwards. What was originally a loss leader into family business turned out to be a costly mistake on behalf of the insurer.
Expect to see reduced family discounts going forwards as well.
5.Adapting to new technology
As AI becomes increasingly prevalent in the insurance industry, its impact will likely help to contain costs.
The oversight it provides in terms of analysing claims data, and insurance usage, will allow providers to spot patterns which can help to identify overcharging, over usage, and ultimately fraud.
AI should also help to expedite claims processing which will help insurers reduce internal costs which hopefully will result in long term downward pressure on premiums.
As we navigate annual premium increases of between 10 and 15% on average, the pressure increases on the health insurance market to ensure premium increases are sustainable.
