Co-payments in health insurance may reduce hospital admissions, but the model — scheduled to be launched early this year — should benefit the industry in the long run because it helps reduce premiums, making private health insurance more affordable, says InnovestX Securities.
According to the brokerage, the transition of private health insurance policies to a co-payment model may influence policyholders' behaviour by reducing hospital admissions for minor illnesses and simple diseases.
However, the overall impact on hospitals is expected to be minimal, as this segment contributes only a small proportion to total hospital revenue, noted InnovestX.
Co-payment refers to a system where policyholders share a portion of medical expenses, unlike the traditional all-inclusive plans, in which all costs within the limits of the policy are fully covered. This shift is driven by rising healthcare costs and high claims ratios, particularly for common illnesses such as upper respiratory infections, influenza and vertigo.
The Office of the Insurance Commission (OIC) decided to introduce the co-payment model as health treatment costs have skyrocketed over the past several years, causing insurance claims and the loss ratio to rise substantially, especially in the areas of children's health insurance and simple illness claims.
Under the latest health standards, insurance companies have the option to include co-payment features in their policies. The change will take effect upon policy renewal, possibly causing a decline in outpatient visits to hospitals in the short term.
"We do not expect all insurance policies will apply the co-payment option, resulting in limited impact on hospital revenue. Moreover, the reduction in insurance premiums resulting from co-payment could enhance accessibility to private health insurance for a broader population over the long term," InnovestX said in a research note.
The brokerage maintains an "outperform" rating for Bangkok Dusit Medical Services (BDMS), with a target price of 36 baht, and Bangkok Chain Hospital (BCH) with a target price of 21 baht.
BDMS was highlighted as the "most promising stock" in the sector, attributed to its high revenue contribution from private health insurance at 30% and its adaptability to evolving revenue structures, according to InnovestX.
"The adoption of co-payment is a development worth monitoring closely, as it represents a significant shift that could reshape both the insurance industry and healthcare service delivery in the long term," noted the research.
