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Protect against “sky-high medical costs”! Compare Voluntary Health Insurance Scheme semi-private ward plans.
Hong Kong’s public healthcare system is severely overstretched. During every influenza peak, hospital beds are even placed in corridors, with utilisation exceeding 100%, which is deeply concerning. This year, the outbreak of novel coronavirus has brought public hospitals, which were already at breaking point, close to collapse. In fact, many people who can afford it choose to take out medical insurance, so that they can receive prompt, high-quality treatment in private hospitals when they fall ill, while also avoiding adding to the burden on the public healthcare system. Last year, the Government introduced Voluntary Health Insurance, standardising the basic policy terms while allowing policyholders to claim tax deductions, attracting the attention of the middle class. Faced with the many Voluntary Health Insurance products on the market, how should you choose?
Staying in a semi-private room costs approximately 50% more than staying in a standard ward; the former requires a higher sum insured
When buying medical insurance, there are two key considerations: what level of protection do you want, and how much are you willing to pay? Voluntary Health Insurance provides hospitalisation medical cover, reimbursing hospital medical expenses on an indemnity basis, without restricting which illnesses are covered. The first question is therefore which type of hospital room you want. During the influenza peak, many people—especially parents buying insurance for their children—are concerned about ward density. Standard wards in private hospitals accommodate four to six patients, with visitors present throughout the day, making it difficult to eliminate the risk of spreading illnesses between patients. A private room naturally provides a more desirable environment, but it is very expensive and the premiums are substantial. In fact, private hospitals in Hong Kong offer semi-private rooms (Semi-Private), which accommodate no more than two patients and are certainly more spacious than standard wards. The semi-private rooms at Hong Kong Adventist Hospital are even individual rooms, with only two patients sharing a bathroom, providing a high degree of privacy while also making it convenient for family members to visit and provide care. This time, 10Life has attempted to analyse the semi-private room plans aimed at the middle class among the various Voluntary Health Insurance products available in the Hong Kong market.
When staying in a semi-private room, not only the room charges but also doctors’ fees, operating theatre fees, miscellaneous expenses and other costs mean that overall medical expenses are approximately 50% higher than those for a standard ward. Therefore, we have higher expectations of the sums insured under semi-private room plans. In terms of their product structures, some plans “set a benefit limit for each item”, while others provide “full reimbursement”, and their coverage levels differ considerably. We will illustrate this using medical conditions that concern many people. The first is total knee replacement surgery, commonly known as “knee replacement”, for which the median waiting time at public hospitals is nearly three years (see Note 1). Another example is cancer, particularly where treatment involves expensive targeted drugs. These drugs may not necessarily be covered by the Government safety net (see Note 2), and any inadequacy in the sum insured will then become clearly apparent. Through this analysis, we hope to identify Voluntary Health Insurance products (semi-private room plans) that offer strong protection against “sky-high medical costs”.
Medical insurance products offering “full reimbursement” provide better protection
As shown in the chart above, for total knee replacement surgery, products that impose itemised limits, such as Manulife and Prudential, are estimated to provide approximately 91% coverage, meaning that the insured person would have to pay around HK$25,000 out of pocket. By contrast, products offering “full reimbursement”, such as AIA, AXA and Bupa, provide almost 100% reimbursement.
We then analysed a serious liver cancer case in which the patient required not only surgery but also targeted drugs. The differences in estimated coverage between the various products were even more pronounced this time. Products offering “full reimbursement” again reimbursed almost the entire cost. However, the estimated coverage provided by Manulife and Prudential was only 72%, because the extremely expensive targeted drugs were classified as “non-surgical cancer treatment”, for which the products imposed a limit of HK$120,000. The insured person might therefore have to pay as much as HK$166,000 out of pocket. It should be noted, however, that this case represents only a general scenario. If the insured person requires long-term use of targeted drugs, their medical expenses will be even higher, making the out-of-pocket amount even more difficult to estimate. It is no wonder that many people describe targeted drugs as a bottomless pit.
In fact, for semi-private room plans, even if the benefit limits for individual items are increased, consumers will ultimately find it difficult to calculate the level of protection provided by their medical insurance because so many items are involved. It is like taking a long taxi journey while listening to the meter ticking but being unable to see the meter—the final bill remains entirely unknown. Therefore, some insurance companies have launched medical insurance products offering “full reimbursement”. These products mainly set annual and lifetime benefit limits, while providing “full reimbursement” for multiple individual items. Consumers consequently do not need to calculate each item separately and can feel more reassured. However, “full reimbursement” is still subject to the treatment being “medically necessary” and the expenses being “reasonable and customary”; otherwise, the insurer may reject the claim.
“Full reimbursement” sounds very attractive, but is it necessarily much more expensive than products that “set limits for individual items”? As shown in the chart above, the premiums for the item-limited Manulife and Prudential plans are HK$1,000 to HK$2,000 cheaper for men. For women, however, their premiums are similar to those of products offering “full reimbursement”, and Prudential in fact has the highest premium. Therefore, insurance should not be selected based on intuition; careful comparison is essential.
The annual benefit limit must be sufficiently high to guard against unpredictable medical expenses
Some products do not impose a lifetime benefit limit. Does this mean that you can use medical services without worry for the rest of your life? Not having a lifetime benefit limit may sound impressive, but it is only meaningful when paired with a sufficiently high annual benefit limit. Consider that, when you unfortunately develop a serious illness, you may need to pay substantial medical expenses within a short period. In addition, treatment for certain serious illnesses can trigger other diseases. For example, some chemotherapy patients may develop heart disease (see Note 3). If these conditions occur within the same year, the annual benefit limit must be sufficiently high; otherwise, it may be unable to cover repeated medical expenses during that year.
Furthermore, everyone should pay attention to medical inflation. According to data from Willis Tower Watson at the end of 2019 (see Note 4), Hong Kong’s medical inflation rates were 7.5% in 2018, 8.2% in 2019 and an estimated 8.3% in 2020. In view of the ageing population, rising demand for medical services and the emergence of new drugs and medical technologies, medical inflation is unlikely to reverse. For mid-to-high-level medical services, the inflation rate may be significantly higher than that of general consumer prices. Therefore, when taking out a semi-private room plan, a sufficiently high annual benefit limit today will naturally provide greater ability to cope with the continuing rise in medical costs in the future.
Although the annual benefit limit is undoubtedly important, insurers still have ways to control claims. Although medical insurance plans with a “full reimbursement” structure do not set limits for individual items, they may still impose caps on specific unpredictable expenses. For example, they may set a limit for “non-surgical cancer treatment” to control the reimbursement of targeted drugs.
In addition, although Voluntary Health Insurance mainly provides hospitalisation cover, the products also cover outpatient expenses related to the relevant hospitalisation, namely outpatient expenses incurred before admission and after discharge. Some products limit the number of outpatient visits. AIA and AXA, for example, cover a total of four outpatient visits before and after hospitalisation. Other products impose a time limit. Bupa, for example, covers all outpatient expenses incurred during the 120 days before and after hospitalisation. For more complex hospitalisation cases involving multiple follow-up outpatient visits after surgery, it would generally be preferable for the product to cover outpatient expenses over a longer period without limiting the number of visits.
Among the various Voluntary Health Insurance semi-private room plans above, the BupaBupa Hero Voluntary Health Insurance Plan (Smart Select) has the highest annual benefit limit, at HK$25 million, followed by AXA Hong Kong and Macau’s AXA WiseGuard Medical Insurance (Superior), with an annual benefit limit of HK$10 million. Neither product imposes a cap on “non-surgical cancer treatment”. As for lifetime benefits, Bupa Hero has no limit.
It is worth mentioning that the premiums for all the products above are based on no deductible or excess. If you already have group medical insurance provided by your employer, you can choose a plan with an excess, reducing the annual premium to around HK$5,000 (assuming an age of 35–44).
Amid the shadow of the novel coronavirus outbreak, many people are reducing their time spent outdoors. If you wish to take out Bupa insurance, you can apply online or by telephone and complete the application process from home. For AXA, AIA, Prudential and Manulife, insurance advisers are the main sales channel. You can also make arrangements through the “Find an Adviser” service on the 10Life website.
This article compares only some Voluntary Health Insurance semi-private room plans. To learn more about the products, you can visit the 10Life website’s “Product Decoder” for an in-depth comparison.
[Compare Voluntary Health Insurance semi-private room plans with HK$0 out-of-pocket expenses]
[Compare Voluntary Health Insurance semi-private room plans with HK$10,000–20,000 out-of-pocket expenses]
[Compare Voluntary Health Insurance semi-private room plans with HK$20,000–50,000 out-of-pocket expenses]
Notes:
- For the waiting time for scheduled total joint replacement surgery, please refer to the Hospital Authority.
- 《香港01》 2019-10-03《肝癌無聲來到 不煙不酒六旬婦腹痛近半年 掃描始知屬末期》
- For information on cancer treatments potentially causing heart disease, please refer to Harvard Health Publishing’s Cancer treatments may harm the heart.
- For information on medical inflation rates, please refer to Willis Tower Watson’s 2020 Global Medical Trends Survey.
This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.
10Life Editorial Team
Our team of professional content researchers focussing on insurance
10Life Editorial Team
Our team of professional content researchers focussing on insurance
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10Life Product Comparison and 10Life Insurance Ratings are developed by 10Life Financial Limited, an authorised insurance broker company licensed with the Insurance Authority under License Number FB1526. 10Life Product Comparison and 10Life Insurance Ratings are developed for generic customer segments using mathematical calculations based on product information, facts and data, and are not influenced by any partnerships with or fees received from insurance companies. Any information on 10Life Platform ("10Life Information"), including but not limited to Product Comparison, Product Ratings, Blog Articles are intended for general education purpose and reference only. None of the 10Life Information is intended, nor should they be considered or relied upon, as regulated advice, insurance, financial, investment or professional advice, recommendation, approval, endorsement, invitation or solicitation in respect of any insurance, financial or investment products. 10Life Information does not take into account your individual needs. Reading 10Life Information should not be considered as conducting a suitability assessment, and is not sufficient to form the basis of any decisions to purchase any insurance products. You should rely on information authorised by insurance companies, carry out your own research and/or seek independent advice from licensed intermediaries before purchasing any insurance products or making any insurance decisions. While reasonable effort is used when collecting, validating and updating 10Life Information from various channels, none of 10Life Group and its subsidiaries, affiliates, agents, directors, officers and employees will be responsible for any liability, claim or loss arising from or associated with you using 10Life Information. No warranty, representation or guarantee is given by 10Life Group and its subsidiaries on the accuracy, completeness and timeliness of the information. If you have any questions on 10Life Product Comparison and 10Life Insurance Ratings, please email us at enquiries@10life.com
