Scoring Methodology of Mass Market Medical Insurance

Medical insurance mainly covers hospitalisation expenses, and the insurance policy is usually renewed on an annual basis. Mass market medical insurance products usually have maximum coverage limits on certain medical expense categories, with relatively lower annual premiums compared to high end medical insurance. Many of these products also offer additional coverage (supplementary major medical) with extra premium.

Many consumers worry that in an unfortunate event of requiring hospitalisation at a private hospital, how much of the hospital bill their medical insurance can cover, and how much they would need to pay out of pocket. Due to the complicated structure of mass market medical insurance products, with inner benefit limits on various medical expense items, an average consumer may not be able to estimate the amount of coverage.

In order to compare the coverage for different mass market medical insurance products, 10Life selected a number of common hospitalisation cases with different severity levels and required medical services, and consulted with a number of medical specialists on the estimated medical expenses under general circumstances. Using these assumptions, our actuaries calculated the estimated average coverage of each mass market medical insurance product to arrive at the product comparison and scores.  The coverage is based on non-network doctor usage as the doctors available for each insurance panel can differ significantly.

Other factors including policy terms or conditions, ease of claims, and your individual needs, have not been considered.

Note: The premium table shows the current prices at different ages, which does not represent prices in the future, may increase significantly due to medical inflation.  

To estimate the medical cost compositions of the different hospitalisation cases, 10Life researched into public information available, including the following sources:

However, the data available of these public sources lacked the details and comprehensiveness needed for our purpose. The charges for different surgeries and procedures are shown as lump sums without breakdown on surgeon fees, operating theatre fees, anaesthetist fees and other expense categories such as diagnostics and medical devices. Information on certain common procedures like heart related surgeries are often missing. As most mass market medical products have claim limits on different medical expense categories, the public information currently available lack the details required to accurately estimate the coverage and out of pocket amounts.

To improve on the accuracy of our estimates, 10Life reached out to the claims department of several major medical insurers to obtain initial estimates of the 12 different cases down to each medical expense category level. We then consulted with medical specialists in Hong Kong to verify the estimates by expense category. We also cross referenced the resulting overall costs to the public information where available to ensure reasonableness. Note that these estimates are based on general circumstances of each hospitalisation case (i.e. assuming no complications other than the listed conditions).

For products with deductibles, the estimated coverage ratios are calculated without considering the deductible amount. As consumers choose a certain deductible in exchange for lower premium, they should be conscious of the resulting expected out-of-pocket shortfall amount. 10Life focusses on comparing coverage based on unexpected events, and the deductible itself does not impact the coverage limits within the product. Therefore, products with deductibles are scored as if they had no deductibles, i.e. the estimated out of pocket expenses for each case calculated by 10Life do not include the deductible amount.

The relevant medical expense categories and the relative proportions vary under the 12 cases studied. Using these estimated costs on each expense category of each case, 10Life actuaries then refer to the benefit limits on each expense category to calculate the estimated coverage amount (to be paid by the insurer) and out of pocket expenses (to be paid by the policyholder).