In Hong Kong despite stabilisation in medical expenses, the sharp increase in utilisation has led to a cumulative 55% surge in staff medical insurance expenses over the past three years according to a new study.
The study Hong Kong’s first 'Staff Medical Insurance Index' conducted by The Hong Kong Polytechnic University College of Professional and Continuing Education (PolyU CPCE) in collaboration with corporate staff benefit and MPF consultant GUM provides a comprehensive illustration of the actual utilisation, expense and premium trends of group medical insurance in Hong Kong.
A media release by PolyU CPCE said, “The Index is composed of the Utilisation Index, the Expense Index and the Premium Index, covering data from Hong Kong’s group medical insurance market from 2006 to 2024.
“Based on in-depth research and optimisation, the Index is developed with three core findings derived from the analysis, which provide insight into the real conditions of the group medical insurance market.”
The Index reveals that despite stabilisation in medical expenses, the sharp increase in utilisation has led to a cumulative 55% surge in staff medical insurance expenses over the past three years.
The Utilisation Index consists of the Hospital Benefit Utilisation Index and the Outpatient Utilisation Index. Since the resumption of normalcy after COVID outbreak, the Outpatient Utilisation Index has surged significantly, recording a cumulative increase of 102% over the past two years.
Centre for Ageing and Healthcare Management Research of PolyU CPCE director Dr Ben Fong said, "After the pandemic, the public’s immune memory for common colds has diminished, leading to a sharp increase in upper respiratory infections following the lifting of the mask mandate. This has significantly boosted employee demand for outpatient services to higher levels before the outbreak of the pandemic.”
Medical inflation remains a key concern. The Expense Index, which reflects outpatient and hospitalisation expenses, remain high but is showing signs of stabilisation. Last year, the Index declined by 6% year on year to 202, the first drop in four years, with average hospitalisation expense per surgery falling to HK$21,851. Meanwhile, the Outpatient Expense Index has decreased for two consecutive years, dropping 8% last year to 284, with average outpatient expense falling to HK$533 per visit. These trends suggest both hospitalisation and outpatient expenses appear to have dropped.
GUM chief executive Dr Gloria Siu said, "The primary factors behind the decline in average medical expenses include the growing prevalence of same-day surgical procedures for virus wart treatment and gastrointestinal endoscopy, which have lowered overall hospitalisation expenses. At the same time, a surge in upper respiratory infections has driven up the utilisation of general outpatient services, leading to a reduction in average outpatient expense. However, as medical costs continue to rise, we anticipate that expenses will return to an upward trend in the future."
The Premium Index has increased for three consecutive years, showing an upward trend since 2022. By 2024, the Composite Premium Index had surged by an accumulated 55% over the previous three years, with hospital benefit premiums rising more sharply than outpatient premiums, primarily due to increased utilisation of medical services.
PolyU CPCE dean and an expert in health economics Professor Peter Yuen said, "The rise in medical premiums is mainly driven by high utilisation rates. Insurers set future premium rates based on past claim experiences. Group medical insurance is facing a dilemma where high utilisation leads to premium increases, which, in the long run, could undermine the sustainability of private healthcare and indirectly intensify the pressure on the public healthcare system.”
Hong Kong Staff Medical Insurance Index committee member Lawrence Hung said, "The sharp rises in group medical premiums have placed significant financial burdens on many employers, an issue which cannot be ignored.”
According to the research report of the Index, employers can mitigate potential premium increases by selecting medical insurance plans better align with employees' needs, healthcare education and targeted preventive measures. This approach can not only enhance employee well-being but also improve corporates' cost efficiency, potentially breaking the cycle of rising claims driving up premiums and business expenses.
PolyU CPCE and GUM aim to update the Index on a quarterly basis to enhance different parties' awareness of medical insurance utilisation. In the long run, they aim to foster the smarter utilisation of insurance as well as to improve the sustainability of the private healthcare system and reduce the burden on the public healthcare system, so as to create a win-win situation for various stakeholders.
The aim is to ultimately help to achieve the social goal of "Health for All". In the long run, the initiative seeks to break the cycle of rising claims driving up medical costs and premiums.