【Health insurance premiums】Are health insurance premiums rising? The real driver may not be medical inflation alone.

Recently, many VHIS policyholders have found at renewal that the premiums for the same cover are significantly higher than a few years ago, with some plans having risen by as much as 20% to 30% in just three years.

Many people immediately assume that the premium increase in health insurance is simply due to “medical inflation”. However, according to the latest claims data analysis by the Hong Kong Federation of Insurers (HKFI) and PolyU CPCE¹, the real reason premiums are being pushed up is not only the rising cost of medical treatment, but also the unprecedented increase in how frequently Hong Kong people are using private healthcare services.

The data shows that over the past four years, the frequency of hospitalisation claims has surged by nearly 70%, while the amount per claim has only increased moderately. In other words, behind the sharp rise in premiums, the cause is not necessarily just “medical fees are too expensive”, but rather “more and more people are using healthcare services more frequently”. Moreover, this change is not a short-term phenomenon, but a structural shift in Hong Kong’s healthcare model.

This time, 10Life will analyse the reasons behind health insurance premium increases based on the latest claims data analysis by the Hong Kong Federation of Insurers (HKFI) and PolyU CPCE¹, and explain how to respond to the trend of rising health insurance premiums. 

Day Surgery Replaces Hospitalisation, With Claims Rising Sharply

In the past, medical insurance was mainly used for major hospital stays or critical illnesses, such as surgery and hospitalisation for illness, which involved high medical expenses.

Today, however, an increasing number of medical procedures have shifted to day surgery centres, including gastroscopy, colonoscopy, viral wart treatment and cataract surgery. These procedures do not require formal hospital admission, but claims can still be made to insurers.

Research data shows that medium- and low-value claims (around HK$5,000 to HK$15,000) recorded the most significant growth, rising by nearly 80%. By contrast, expenses related to ward and meals increased by less than 30%, reflecting that growth in medical costs is no longer driven mainly by traditional inpatient services.

The most common claim categories include:

• Digestive system diseases  
• Viral warts  
• Viral infections  
• Benign digestive system tumours  
• Cataracts  

Take the writer’s friend as an example: he saw a specialist because of stomach pain. To be on the safe side, the specialist recommended arranging a gastroscopy to check whether he had gastritis or any other issues.  

On the day of the examination, he found the day centre’s workflow to be highly standardised and efficient, with many patients undergoing gastroscopy and the process moving quickly. Fortunately, the results were unremarkable, with only a few small polyps found. The doctor also removed the polyps and advised regular follow-up, with another gastroscopy every five years. He claimed the relevant expenses under both his group medical insurance and personal medical insurance, and received full reimbursement.

For patients, early examination certainly has its value; however, as such tests become increasingly common and most can be paid for through insurance, the overall number of claims and medical expenses will naturally continue to rise.

Outpatient Care Shifting from General Practice to Higher-Cost Specialist Services

In addition to the increase in day procedures, Hong Kong people’s outpatient habits are also changing. Research indicates that the use of general practice outpatient services has fallen by nearly 20%, whereas the number of claims for chiropractic care, physiotherapy and Chinese medicine has increased significantly:

• Chiropractic care: up by about 70%  
• Physiotherapy: up by about 40%  
• Chinese medicine: up by about 40%  

The issue is that the average claim amounts for these services are often far higher than those for general practice outpatient consultations.

For example:

• General practice outpatient consultation: average below HK$400  
• Physiotherapy / chiropractic care: around HK$600 to over HK$900 per visit  

In other words, Hong Kong people are gradually moving away from “low-cost outpatient care” towards more expensive specialist and treatment-based services.

The reasons behind this include an ageing population, as well as the rise in chronic pain and chronic illnesses among urban residents. It also reflects changing insurance usage habits. As more policies cover physiotherapy, chiropractic care and Chinese medicine, utilisation of these services naturally increases, further pushing up overall claims expenditure.

Personal Medical Insurance Under the Greatest Pressure for Premium Increases

Although both are medical insurance, the cost differences between policy types are actually quite substantial. Research shows that the average claim amount under personal policies is:

• about 40% higher than group medical insurance for hospitalisation  
• almost 50% higher for outpatient care  

One reason is that company group medical insurance generally includes a panel network, allowing insurers to negotiate fees with designated medical providers, much like a bulk purchase arrangement. This enables insurers to provide medical services to insured persons at more favourable prices, helping to control costs. By contrast, personal VHIS policyholders can usually choose private hospitals and specialist doctors freely. While this offers greater flexibility, it is also more costly for insurers.

Therefore, “company medical insurance + network doctors” is often the lowest-cost model, whereas “personal VHIS + self-selected private specialists” is the most expensive protection package in the market.  

Source: The Hong Kong Federation of Insurers (HKFI) and the latest claims data analysis by PolyU CPCE.

The data reveals the scale of the problem, but what is even more thought-provoking is this: if the very design of medical insurance products encourages greater utilisation, are rising premiums inevitable? Here is 10Life’s observation.

Full reimbursement design may, to some extent, encourage the use of medical services

Over the past few years, the Hong Kong medical insurance market has focused on high-end products. Most of these claim to offer full reimbursement, together with exceptionally high annual and lifetime benefit limits, attracting many customers.

In fact, medical insurance with full reimbursement is relatively uncommon overseas. Generally speaking, insurers abroad follow the principle of “co-insurance”. Simply put, when the insurer pays a claim, the customer must also bear part of the medical expenses. As a result, customers tend to be more cautious and to use medical services only as needed, reducing misuse and, in turn, helping insurers control claims costs.

By contrast, in many high-end VHIS plans in Hong Kong, as long as the treatment falls within the covered scope, consumers hardly need to consider the cost.

The data also reflects that group medical insurance with cost-sharing mechanisms generally has claims costs around 40% to 50% lower than those of individual policies. This does not mean policyholders are misusing insurance; rather, it is the product design itself that directly affects medical utilisation behaviour.

Therefore, insurers should review product positioning, benefit structure and pricing strategy, strike a balance between coverage and affordability, and ensure that medical insurance remains sustainable in the long term, so that the public can receive genuinely lasting healthcare protection.

Insurers are correcting risks they initially underestimated, making premium increases unavoidable

Another key issue is that many VHIS products may have been priced too optimistically when first launched.

At the time, insurers mainly priced these products based on pre-pandemic medical data, but after the pandemic, Hong Kong people’s habits of using private healthcare services have changed. In other words, the current premium adjustments are, to some extent, insurers’ way of readjusting for claims risks that were initially underestimated.

Moreover, this round of premium increases may not be over yet. If the current trend continues, the cumulative increase for some high-end medical insurance products over the next five years could reach 50%, and in the long run may even double.  

Based on the same rate of increase, a medical insurance plan with an annual premium of around $6,000 today could see its premium rise to over $15,000 by the age of 50. You can make use of 10Life’s "Voluntary Health Insurance Premium Increase Calculator" to estimate premium costs at different ages in the future. 

1. Calculate future premiums first, rather than looking only at the present

When many people buy medical insurance, they only focus on whether the current premium is cheap. However, the real pressure of medical insurance often arises after the age of 40 or 50. Therefore, before taking out a policy, you should first project future premium increases and assess whether you will still be able to afford the long-term cost after retirement.

If future premiums are expected to be too high, you should adjust your protection structure early while you are still young and healthy. Calculate it now with the Voluntary Health Insurance premium increase calculator.

2. Make good use of the deductible to reduce long-term premium pressure

A deductible refers to the portion of costs the policyholder must bear when making a claim, while the remaining eligible medical expenses are reimbursed by the insurer according to the coverage amount. Plans with a deductible require you to pay a small portion of each claim yourself, but the premiums are generally more affordable.

If you already have company medical insurance, you may consider a dual approach of “company medical insurance + personal VHIS with a high deductible”.

For example, switching from a $0 deductible to a $20,000 deductible may result in an annual premium difference of several thousand dollars. Assuming annual savings of $3,000, you could save nearly $90,000 over 30 years.

Therefore, for people who already have basic medical protection, a high-deductible plan is not necessarily a bad thing. If you would like to know more about VHIS medical insurance plans, feel free to use the Product Decoder to compare coverage and price.    

3. When you are in good health, consider comparing medical insurance again

If your health is good and you have no chronic conditions, you may also consider comparing different VHIS options in the market again. However, the most important principle is: do not cancel your existing policy before the new policy has officially come into effect. This is because all new medical insurance policies require fresh underwriting. If there is any gap in coverage in the meantime, the risk can be very significant if you become ill.

This medical insurance premium increase is not merely a short-term issue of medical inflation; rather, it reflects a structural shift in Hong Kong’s overall healthcare usage pattern.

The upward pressure on premiums is likely to continue. Rather than waiting until premiums become unaffordable, it is better to plan ahead and reassess your protection structure and long-term affordability. You can first use the 10Life Voluntary Health Insurance premium increase calculator, or contact 10Life’s licensed advisers to understand the deployment plan that suits you best. 

Source: 
1. Hong Kong Economic Times: Insurance claims｜Private medical insurance spending surged by over 60% in four years; related to increased frequency of hospitalisation cover claims; claims of over HK$100,000 more than doubled 

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.