The new co-payment rule, effective March 20 in Thailand, requires health insurance policyholders to share a portion of medical expenses. It aims to manage rising healthcare costs and encourage responsible consumption.
The upcoming co-payment rule is poised to significantly change the health insurance landscape in Thailand, addressing challenges such as escalating medical costs, difficult economic conditions, and instances of excessive claims. Set to be implemented on March 20, this system will require policyholders to share a portion of their medical expenses unlike traditional insurance models that cover all costs within set policy limits. The catalyst for this change stems from the fallout of the COVID-19 pandemic, which has led to rising healthcare expenses and an increase in unreasonable claims for common ailments.
The Thai Life Assurance Association (TLAA) announced that the co-payment clause will apply to both new policies and renewals. Though it may initially impact only around 5% of health insurance policyholders, its implications could reshape the industry. Under the new system, co-payment will be triggered under specific conditions. If policyholders make three claims related to common medical conditions—such as headaches, influenza, diarrhea, muscle inflammation, stomach issues—amounting to 200% of their annual premium, they will incur co-payment costs in the following year. Similarly, if claims for general diseases total 400% of the annual premium, co-payment will also apply. Those meeting either criterion will face a 30% co-pay on all medical costs the following year. If both conditions apply, the co-pay increases to 50%. Notably, the co-payment does not apply to major surgeries or critical illnesses.
A study by Willis Towers Watson highlighted Thailand’s alarming medical inflation, which is the highest globally. While the average inflation rate worldwide hovers around 10%, Thailand’s medical inflation has surged by 8-15%. This rapid increase, driven by an aging population, medical advancements, and increasing healthcare demands, could possibly render the healthcare system unsustainable. The co-payment aims to subtly change consumer behavior, encouraging policyholders to manage healthcare expenses more effectively.
TLAA president Nusara Banyatpiyaphod emphasizes that the co-pay structure isn’t merely a mechanism for cost-sharing but serves to foster a more sustainable healthcare environment by aligning the interests of insurers, policyholders, regulators, and healthcare providers. The introduction of the co-payment scheme has immediate challenges, particularly in how consumers adapt to new out-of-pocket expenses. Early adopters might view increased expenses negatively, which could lead to hesitance in taking up new policies or renewing existing ones. This reaction could dampen overall premium growth in the short term, as Mr. Wilson from Allianz Ayudhya Assurance noted.
However, the long-term benefits of the scheme are significant, as it encourages responsible healthcare consumption, reduces unnecessary medical expenses, and helps maintain the affordability of private health insurance. By sharing medical costs between insurers and policyholders, the co-payment framework is expected to lower overall healthcare expenses as costs continue to rise.
InnovestX Securities suggests that this model could change policyholder behavior by decreasing hospital admissions for minor illnesses, as the co-payment will influence decisions on seeking medical care for non-critical conditions. Initially, this may result in a decline in outpatient visits, particularly in the short term, though the overall impact on hospitals could be minor given that this segment typically contributes a small portion of total hospital revenues. Moreover, co-payment could lead to lower insurance premiums compared to traditional health plans, making private health insurance more affordable and accessible over the long term.
This reform aligns with practices in other countries, such as Singapore, where a co-pay model ensures consumers contribute a portion of their healthcare expenses, promoting responsible healthcare use. In summary, while the co-payment rule presents short-term hurdles, its long-term prospects are aimed at nurturing a healthier insurance landscape, benefiting both consumers and the insurance industry by fostering more conscientious healthcare practices and managing inflation in medical costs effectively.
