Do insurers have a new strategy to manage health insurance premiums in Hong Kong?
Hong Kong is one of the most expensive locations in Asia and indeed the world for private medical care. This, in turn, means that the city is also one of the most expensive locations for medical insurance that covers the cost of care at the city’s 11 private hospitals and hundreds of private health clinics around the city. Due to this, all parties involved with healthcare, including insurers, are constantly trying to manage the cost of care. In this article, we take a look at what the city’s health insurance providers are doing to manage the cost of health insurance premiums.
The most recent strategy
If you read the news in the city, you may have noticed a bit of an inflammatory article posted in various news outlets in mid-February 2016 about a certain Hong Kong-based insurance company’s new strategy of insurance premium management. The SCMP has a full overview of what exactly went on. In short, according to the article, “The insurance giant said in a letter to private doctors [in Hong Kong] that it might no longer cover hospitalization fees for “simple procedures” such as colonoscopy, gastroscopy and cataract surgery, which can be carried out at day carecenters.”
The idea here is that the insurer is essentially trying to encourage doctors at the private hospitals to recommend that non-medically necessary simple procedures be done at outpatient or day care centers rather than in the hospital. Generally, simple procedures conducted at these centers will cost less than at the private hospitals. For example, the article noted that “90 percent of cases handled over the past year involved hospitalization, with an average health claim of HK$30,000 – three times more expensive than if they had been treated at a day care center.”
Will it work?
On paper, this strategy makes sense for the insurer as it helps to ultimately reduce the overall amount they will pay out on claims and the number of claims submitted. This, in turn, should result in smaller decreases in your premium each year. In other words, it’s a way for insurers to curb premium inflation. Beyond that, this strategy is also a way to help curb or manage the cost of health care at private hospitals in Hong Kong. In some cases, private hospitals can tend to overcharge. For example, another article published by the SCMP on this strategy reported that “In a statement, the insurer cited examples of overcharging, including one of a HK$400,000 gallbladder removal surgery – far above the average claim cost of between HK$50,000 and HK$80,000.” Overcharging for medical care is a serious concern in the city, especially at private hospitals where there is little to no cost oversight in place to help ensure care remains somewhat accessible. If insurers can work with doctors to direct people to the lower cost option, in a perfect world, you should start to see better management of the cost of health care at private healthcare facilities in the city. This ultimately translates to better premium management and potentially more affordable health insurance.
Doctors say no
Looking at the other side of the coin, what works on paper doesn’t always work in reality. Once the news broke that the insurer had sent letters to doctors stating their stance. According to a follow-up article in the SCMP, “Dr Gabriel Choi Kin, president of the Medical Association, criticised the insurer’s move as “unacceptable”, and said carrying out such procedures in day medical clinics was not entirely safe.” He went on to say, “It’s up to [doctors] to decide whether a patient requires [a hospital stay]. Whether the stay would be reimbursed is purely up to the insurance company,” In other words, while procedures at day clinics may be more affordable, for some people they might be less safe. For example, elderly patients, patients with existing medical conditions, or high-risk patients might need extra monitoring before and after a surgery, monitoring that is not usually done at day clinics. The doctors worry that if an insurer dictates where people can receive care, it might result in more claims especially if a procedure goes wrong and hospitalization is needed. This would ultimately result in more claims and higher medical insurance premiums in the city.
What this recent row highlights is, that honestly, both sides here have a good point: Insurers are worried about the cost of health care in the private sector, while doctors want to make sure patients receive the best medical care. In our viewpoint, the insurer might have just gone about trying to implement cost containment strategies in the wrong way. In order to effectively manage costs, it is important for all sides to work together. This means that insurers need to maintain strong relationships with doctors and not alienate them, while doctors need to be receptive to ideas from insurers.
There’s another factor to consider here
That said, there is another factor here that the various articles and debates on this issue have not really discussed: the people who have health insurance and want to receive care at the private hospitals. In our experience, most people who purchase private health insurance plans want to be able to receive care from the private hospitals of their choosing. Placing too many limits on where you can receive care, or poorly managing claims and inflation could drive people away from specific plans. If this happens there will come a time where there is not enough money available for the insurer to cover existing claims. Should this happen, insurers will often increase premiums in order to ensure they will be able to cover claims. We aren’t saying insurers shouldn’t attempt to manage premiums and the cost of care, rather they should strive to work closely with doctors in the city in order to develop solutions that work for all parties including the end-user who ultimately will use the plan.
You do have options
Luckily, there are a number of insurance providers out there who have developed strong relationships with the healthcare community and in turn have strategies in place to help manage premium inflation. The question is, how can you find one of these insurers and plans? That’s where a broker like Pacific Prime Hong Kong comes in. With long-standing relationships with major international insurers in the city we are well aware of who is doing what, and what plans are best able to cover you at the private hospitals in Hong Kong. Talk with us today to learn more about how we can help.