Thailand Unveils Co-pay Plan: Lower Costs, Higher Risks for Some
Thailand is poised to reshape its health insurance landscape with the introduction of a new co-payment system, effective March 20, 2025. This initiative addresses escalating medical costs, challenging economic conditions, and a perceived surge in unnecessary insurance claims. The system aims to curb rising expenses and ensure the long-term viability of health insurance for Thai citizens.
The co-payment system requires policyholders to share a portion of their medical expenses, a departure from the traditional, fully-inclusive model. This shift is a direct response to the financial strain on the industry following the pandemic, coupled with increasing healthcare costs and a perceived rise in claims for minor ailments.
Affecting an estimated 5% of policyholders, the co-payment clause applies to both new policies and renewals starting March 20, 2025. The Thai Life Assurance Association (TLAA) specifies that co-payments are triggered under specific circumstances. Policyholders submitting three claims for common conditions (headaches, flu, or diarrhea) totaling 200% of their annual premium will be subject to co-payment the following year. Similarly, three claims for general illnesses totaling 400% of the annual premium will also trigger co-payment.
The co-payment structure is tiered. Meeting either of the above criteria results in a 30% co-pay for all medical costs the following year, regardless of severity. Policyholders meeting both criteria will face a 50% co-pay. Importantly, major surgeries and critical illnesses are exempt, according to TLAA President Nusara Banyatpiyaphod.
This initiative is implemented against a backdrop of alarming statistics. A Willis Towers Watson study shows Thailand experiencing the highest average medical inflation globally, ranging from 8% to 15% in the past year, significantly exceeding the global and regional average of 10%. This surge, attributed to factors such as an aging population, emerging diseases, air pollution, and advancements in medical technology, has severely strained the insurance sector.
Experts warn that without intervention, healthcare costs could double every eight years, rendering the system unsustainable. Thomas Wilson, President and CEO of Allianz Ayudhya Assurance, emphasizes that co-payment’s core value lies not only in cost-sharing but also in incentivizing responsible healthcare consumption. He believes this will foster a more sustainable healthcare ecosystem and maintain affordable private insurance.
The transition to a co-payment model presents both opportunities and challenges. Short-term concerns include potential consumer resistance to increased out-of-pocket expenses, potentially affecting premium growth. However, the long-term benefits, according to Mr. Wilson, are substantial: responsible healthcare utilization, curbed unnecessary expenses, and a secure future for private health insurance.
The impact extends beyond the insurance industry. InnovestX Securities predicts a potential decrease in hospital visits for minor illnesses, although the overall effect on hospital revenue is expected to be minimal. Furthermore, the co-payment model could lead to lower premiums, broadening access to private health insurance in the long run.
International examples offer valuable insights. Singapore’s co-payment model, combined with national medical savings schemes, has demonstrably lowered healthcare costs and encouraged responsible usage. Similarly, Malaysia implemented a co-pay scheme in 2024 following double-digit medical inflation, providing consumers with lower-cost insurance options.
To ensure a smooth transition, Allianz Ayudhya plans to prioritize customer education, highlighting the long-term advantages of co-payment. The company also intends to introduce flexible co-pay options and collaborate with healthcare providers to ensure cost-effective care. Expanding value-added services like telemedicine and wellness programs is another key strategy.
Industry experts believe the co-payment system, by discouraging unnecessary claims, will promote financial stability within the insurance sector. This will allow insurers to offer a wider range of policies tailored to diverse needs, making coverage more affordable. However, consumer advocates, such as Saree Ongsomwang, Secretary-General of the Thailand Consumers Council, urge the government to regulate medical service fees, drawing inspiration from Singapore’s fee benchmarks for private hospitals and doctors.
The introduction of co-payment marks a significant shift in Thailand’s healthcare landscape, promising long-term benefits while posing short-term challenges. Its success depends on effective communication, consumer education, and a collaborative approach involving insurers, policymakers, and healthcare providers.
