The Thai health insurance industry has undergone significant changes in recent years, driven by various factors including economic challenges, the fallout from the COVID-19 pandemic, and evolving policyholder behavior.
Traditional health insurance, which has long been the mainstay of the industry, is now being re-evaluated in light of rising costs and unsustainable claims.
Policyholders have been accused of making unreasonable claims, leading to medical costs overshooting and putting pressure on insurers to find new ways to manage expenses.
Traditional health insurance vs copayment
Traditional health insurance in Thailand typically involves paying a fixed premium in exchange for comprehensive coverage.
The insurer bears the full cost of medical expenses, subject to the terms and conditions of the policy.
While this model provides significant benefits to policyholders, it has increasingly become a financial burden for insurers, leading to higher premiums.
In contrast, copayment health insurance is a system where policyholders share the cost of medical expenses with the insurer.
Under this model, the insurer covers a larger portion of the costs while the policyholder is responsible for 30-50 per cent.
This approach is designed to promote more responsible use of healthcare services by policyholders and reduce the financial strain on insurers.
Policyholders may have to pay up to 50 per cent of the total medical service cost.
According to the Thai Life Assurance Association, there are three conditions to meet copayment requirements:
● If policyholders make three claims for simple diseases such as headache, influenza, diarrhea, muscle inflammation, stomach acid, and gastroesophageal reflux, amounting to 200 per cent of the annual insurance premium, they will be subject to copayment in the following year.
● If they make three claims for general diseases with a total amount of 400 per cent of the annual premium, they will be subject to copayment in the following year.
If they fall into one of these two conditions, they would be subject to a 30 per cent copayment for any medical cost in the following year, whether it is related to simple, general, or critical diseases.
● If they meet both conditions, they would be subject to a 50 per cent copayment for any medical cost charge in the following year.
Insurers have pledged that the annual premium would be lower under the copayment health insurance contract, which is expected to be adopted by the insurance industry in March.
Copayment would be enforced for new clients and would not affect existing clients.
Pros and cons of copayment health insurance
The introduction of copayment health insurance brings with it a range of potential benefits and drawbacks.
Pros
Cost reduction: By sharing the cost of medical expenses between insurers and policyholders, copayment can help to reduce overall healthcare costs.
This is particularly important in an environment where costs are escalating.
Lower Premiums: InnovestX Securities Co projects that premiums under the copayment model could be lower than those for traditional health insurance.
This could make health insurance more affordable for a broader segment of the population in the long run. But it is also cautious that it has not been clear how much lower the premium would be.
Sakchai Peechapat, group chief executive at TISCO Financial Group Plc, says it would benefit both consumers and insurance operators: Consumers would gain from the lower premium charge while operators could survive.
Kasikornbank’s K Wealth shared a similar view, saying the lower insurance premium would encourage people to buy more insurance health protections and private hospitals were likely to benefit from rising services in the long run.
Responsible usage: Copayment encourages policyholders to use healthcare services more judiciously, potentially reducing the incidence of unnecessary claims and misuse of insurance benefits.
Cons
Discouragement to purchase: The Kasikorn Research Center says that copayment and other additional conditions for claims, may discourage consumers from buying health insurance.
The additional out-of-pocket expenses may be a deterrent for some.
Increased financial burden: For individuals with chronic illnesses or those requiring frequent medical attention, the copayment model could result in higher overall costs, as they are required to pay a portion of each medical bill.
Complexity: Understanding and managing copayment structures may be more complicated for policyholders compared to traditional insurance, potentially leading to confusion, dissatisfaction and legal disputes.
Will policyholders pay the price?
In response to the challenges faced by the traditional health insurance model, Thailand is set to shift towards copayment health insurance.
This change is driven by the need to address cost overshooting and ensure the sustainability of the insurance industry.
The COVID-19 pandemic has also had a significant impact on the Thai insurance industry, exacerbating existing challenges and highlighting the need for reform.
Insurers have faced increased claims and financial strain, prompting a re-evaluation of traditional models and a shift towards more sustainable solutions.
The Office of Insurance Commission has already announced new regulations and the insurance firms are set to apply them in March this year.
These regulations are aimed at promoting more responsible use of healthcare services and reducing the financial burden on insurers.
Kasikornbank’s K Wealth advises those who worry about adequate health protection to buy new health insurance policies within February, before the copayment rule takes effect.
Meanwhile, Saree Ongsomwang, secretary-general of the Thailand Consumers Council says the main issue of medical cost is the high charges at private hospitals, in particular doctor fees.
The government should impose a ceiling on fees charged by doctors for medical services, she suggested.
Thailand could learn from Singapore where the government has set fee benchmarks for private hospitals and doctors, she said.
