Medical inflation drives insurers towards 30–50% co-payments
Major insurers are scaling back new lump-sum plans as costs rise, accelerating the shift to co-payments and boosting interest in public-hospital cover.
- Faced with rising treatment costs and medical inflation estimated at 14-15% for 2025, major Thai insurers are moving away from all-inclusive (lump-sum) health plans for new customers.
- To control expenses and prevent premiums from becoming unaffordable, insurers are introducing a co-payment model requiring new policyholders to pay 30-50% of their medical bills.
- This shift is creating opportunities for new insurance products focused on public hospitals, which offer significantly lower treatment costs than private facilities.
- These public hospital-centric plans could feature lower premiums and potentially no co-payment, a model supported by new systems like iClaim that allow for treatment without upfront payment.
Rising treatment costs, combined with Thailand’s medical inflation in 2025 (estimated at 14–15%), have prompted major insurers such as AIA and Krungthai-AXA to reduce the share of new lump-sum (all-inclusive) health plans for new customers.
They are shifting towards a co-payment model of 30–50% to control expenses and prevent premiums from rising so sharply that people can no longer afford cover.
Opportunity for lump-sum health insurance limited to public hospitals
A key issue to watch is whether this shock will create opportunities for lump-sum health insurance limited to public hospitals, or for policies integrated with state welfare schemes, something that could emerge over the next 5–10 years.
One example would be integrating voluntary private health insurance with state welfare systems such as Social Security or the National Health Security System (the “gold card”) through a top-up model, expanding coverage and improving access to more comprehensive treatment.
Another possibility is launching new products that allow policyholders to claim the full insured amount when they receive treatment at network hospitals with pre-agreed costs, while requiring co-payment if they seek services outside the network.
The opportunity for lump-sum insurance limited to public hospitals may therefore be more than a temporary trend; it could become a structural strategy that leverages the cost advantage and specialist expertise of public hospitals, while addressing weaknesses in convenience, aimed at attracting younger consumers seeking a better quality of life at a reasonable price.
If lump-sum treatment at private hospitals becomes less viable, policyholders may turn to a public-hospital lump-sum option instead, under lower premium conditions, since public-sector fees are generally cheaper than private-sector charges.
This may be particularly relevant in major provincial centres, where many people already rely on provincial hospitals or Ministry of Public Health (MOPH) regional centres.
Private hospitals cost far more than public hospitals
The Thailand Development Research Institute (TDRI) previously studied differences in treatment costs between public and private facilities, using data from 2014, and found:
- Cataracts: private hospitals cost 11.7 times more than public hospitals.
- Common cold: public hospitals THB500–800; private hospitals THB2,000–3,000, up to six times higher.
- Appendicitis: public hospitals THB16,841–42,631.20; private hospitals starting at THB57,682.70, rising to THB102,149.5, and up to THB211,765.3 at five-star hospitals.
- Acute coronary artery blockage: public hospitals THB89,376–158,680; private hospitals starting at THB164,870, THB288,458, or THB422,058, and up to THB1,150,420 at five-star hospitals, potentially including procedures such as balloon angioplasty or urgent surgery.
That said, these differences reflect cost structures: private hospitals must manage all costs themselves, including advanced technology, land costs, and, most importantly, doctors’ fees.
MOPH breaks barriers with the iClaim system
On this issue, the Ministry of Public Health (MOPH) has begun moving, not merely by improving general services, but by building a new structure to capture a share of the roughly THB150 billion in the private insurance market.
At present, nearly all of this circulates in private hospitals.
The aim is to bring at least 10% back into the public hospital system, about THB15 billion per year, to fund long-term development of medical capacity.
A major obstacle that previously prevented lump-sum insured patients from using public hospitals was inconvenience: patients often had to pay upfront, and reimbursement rules were unclear.
Now, however, the iClaim digital platform has been introduced, allowing insured patients to receive treatment without upfront payment, similar to private hospitals.
In parallel, there is a push to unlock rules so that doctors and staff can treat these patients both during and outside official hours, with fair compensation higher than standard rates.
This could help address staffing shortages and create incentives for specialists to remain within the public system.
Public-hospital policies lower premiums
Most recently, MOPH has partnered with the Thai Life Assurance Association to raise public healthcare service standards and support treatment for policyholders from life insurers.
The ultimate goal is to offer policyholders more choice and control over healthcare costs, slowing future premium increases.
The future focus is on issuing policies limited to public hospitals, with more affordable premiums, easier access, and potentially no co-payment condition like treatment in private hospitals.
Currently, around 28 pilot hospitals nationwide are involved, covering regional hospitals and general hospitals in key health regions, for example, Nakornping Hospital, Chiang Mai, Khon Kaen Hospital, and Hat Yai Hospital, Songkhla.
“Win-win for both public hospitals and the life insurance business, especially consumers with health and life insurance, who will have access to more affordable health insurance options through treatment at public hospitals, which have nationwide networks.
This is expected to lead to new products, policies that select only public hospitals, at premiums that should be more affordable,” said Nusara (Assakul) Banyatpiyaphot, President of the Thai Life Assurance Association.
Comparing the changes
If we compare potential future changes to the public-hospital insurance system:
1. Claim convenience
- Old: patients must pay cash upfront
- New: no upfront payment via iClaim
2. Product variety
- Old: general policies, higher premiums
- New: public-hospital-only policies, lower premiums
3. Target groups
- Old: mainly patients under the three public health funds
- New: adds a fourth pool, private insurance / middle-income group
4. Service locations
- Old: standard inpatient/outpatient buildings within hospitals
- New: standard hospital buildings / off-site clinics / premium clinics
5. Cost control
- Old: based on government regulations
- New: pre-agreed costs with insurers
The expansion of public hospitals, especially large MOPH hospitals nationwide, into the lump-sum insurance market means additional revenue from insurer reimbursements, which can be three to four times higher than standard entitlements.
This revenue would be reinvested to improve services and infrastructure in hospitals and the public health system, ultimately benefiting all patients.
