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4 factors pushing up the cost of health insurance
In recent years, the cost of health insurance has been rising as healthcare becomes more expensive and people seek more and better treatments.
4 factors pushing the cost states The Pacific Prime International Private Medical Insurance Inflation 2017 report, identified a number of drivers that are critical to the cost of health insurance premiums this year: increased competition for medical professionals, regulation changes, an overuse of health care and economic uncertainty.
These, it says, drive inflation on not just a global level, but on a country level too.
In countries such as Hong Kong, Singapore and the UAE, which rely heavily on an expatriate medical workforce, the increased competition has a knock-on effect on insurance premiums as healthcare facilities increase their care costs to help offset the costs of attracting the best staff.
Overuse – increased visits to healthcare providers – is another expensive practice that impacts health insurance premiums in a particular location.
In Dubai, for example, experts predict a huge rise in hospital and clinic visits after the introduction of mandatory health insurance, as people take advantage of their new cover.
This will have a knock-on effect on everyone insured because health insurance companies need to adjust their premiums to reflect the increase in claims.
Patients may also visit relatively expensive facilities – passing on the cost to an insurance company – without a genuine need (if they are suffering a common cold, for example).
Varying level of private medical insurance inflation in 2016
The Pacific Prime report also identified other trends that are likely to influence health insurance premiums, particularly in Dubai, Singapore, Hong Kong and China, which all saw the highest insurance inflation in 2016 (11.2% in Singapore; 12.1% in Hong Kong; 12.06% in China).
Global economic uncertainty, it states, is likely to affect insurance inflation, especially in places seeing a shift in the population dynamics.
Countries and cities such as Dubai and Singapore are seeing an increase of High Net Worth individuals, while financial and job uncertainty is contributing to a reduction in the so-called ‘traditional expatriate’.
In Dubai, the new health insurance regulations are by far the biggest drivers behind increasing premium costs.
The Dubai Health Authority has introduced a minimum level of insurance that every person living and working in the emirate must receive.
- Coverage of pre-existing conditions
- An annual Dh150,000 limit on claims per person per year
- In-patient treatments must have a 20% co-pay, up to Dh500 maximum per visit, or Dh1,000 maximum per year
- Maternity services including up to Dh7,000 for a normal birth and Dh10,000 for a C-section
The introduction of these new rules means health insurance companies are taking on a much bigger risk.
Many people may never need or want to avail of the benefits of their insurance, but the insurance companies still need to analyse the risk of them doing so when they’re working out their premium costs.
This huge but very new change makes it difficult for the insurance market to settle just now.
“In Thailand and the Philippines, private medical insurance inflation fell to 7.8 per cent in 2016”
Health insurance cost decreases
But not everywhere is seeing increases.
In Thailand and the Philippines, for example, the private medical insurance inflation fell to 7.8% in 2016, according to Pacific Prime.
It’s believed the main reason is that the countries are now being grouped with other ‘low cost’ Asian markets where health care is cheaper.
As with any form of insurance, be it house, car or health, there are dozens of factors that affect the cost of an individual’s premium; there is no one-size-fits-all approach.