Essential facts about the evolution of premiums
Each year, insurers recalculate their rates to take into account the evolution of general healthcare expenses. This evolution varies according to geographical areas and mainly according to the level of development of local healthcare systems.
Countries where the healthcare system is undergoing substantial development tend to have the largest increases. This has been the case in many Asian countries over the past 15 years. The example of Thailand helps to understand the general pattern:
The increase in healthcare spending in Thailand between 2012 and 2019 was: 6.3%, 6.3%, 8.7%, 9%, 11.4%, 9.2%, 8.1%, 9%. This sharp increase can be explained by several factors:
- Investments in equipment: doctors and hospitals have been investing in modern equipment such as scanners, MRIs, etc. These are significant investments, which must then be made profitable.
- The cost of pharmaceutical treatments: the prices of drugs are regulated, they aren't negotiated and supervised by public bodies as is the case in Europe, so drugs are generally more expensive, especially as demand increases.
- The principle of supply and demand is driving up prices: more people are increasingly accessing care that they couldn't afford just a few years ago. When their appointment books are full, doctors tend to raise their prices. Since prices are regulated, the strong increase in demand pushes prices up.
In countries where quality healthcare systems have existed for a long time, these increases are lower (around 4% per year in Europe) because new investments are proportionally lower, certain prices are controlled and demand is relatively stable compared to supply.
Each year, two organizations publish reference studies on this subject: Tower Watson and Aon Hewitt. These studies are the basis for most expatriate insurance policies.
Insurers are obliged to follow these general trends, because if they don't, they would soon be unable to reimburse care. In our experience, increases vary between 0% and 10% each year.
If we take the example of Thailand, the cost of healthcare has more than doubled in 10 years. If an insurer reimbursed 100 on average 10 years ago, it now reimburses 200. Insurers have to readjust their rates every year to avoid being unable to pay.
According to the global statistics of the French Social Security system, all healthcare expenses included, if people between 20 and 29 years old spend 100, people between 60 and 69 years old spend 250 (source DREES). This study only takes into account expenses reimbursed by Social Security. If we include expenses that are not or only partially reimbursed (optical, dental, etc.) the ratio can reach x3.
Expatriate health insurers take this general fact into account by applying rates that vary according to the age of the insured. The higher the age, the higher the rate. This will be evident at the time of enrollment, because the premium will be calculated according to the person’s age. This is also evident at on the insured’s birthday, because the insurer will recalculate the premium according to the insured’s increased age. Insurers use two different methods of calculation to do this:
- Either the rate changes every year, in which case the evolution is about 2% to 3% per year;
- Or the rate is made in 5 to 10 year increments and the rate only changes when the increment changes. The increases are then less frequent but higher: about 10% to 18% for five-year increments, for example.
French expatriate health insurance policies have a special feature: the annual increase rate cannot vary individually according to what the insured costs the insurer. This provision comes from a 1989 law on health insurance, amended in 2001, which prohibits the insurer from increasing or terminating an individual policy based on changes in the insured's health status after the policy has been issued.
It may be a technical or trivial question, but it is essential to consider: if tomorrow, you declare that you have cancer, you will not risk being left without insurance or having to pay exorbitant rates. All other policies worldwide don't have this constraint and insurers can do whatever they want.
To learn more, read our special page on French insurance vs. foreign insurance.
Based on the above, regardless of the insurer you select (whether you choose us or another insurer), your overall health insurance premiums will increase between 3% and 13%, the average being around 6-8%.
If an insurer tells you that their all-inclusive policy will increase by this amount, run away. The insurer is lying.
So, our advice is simple: to protect your budget over the long term, allow yourself some margin. If your maximum budget right now is 100, choose a policy today that costs 80. You will be satisfied for a long time. If you choose a policy today that exceeds your budget, the situation will only get worse in the years to come.
It is unusual for policyholders to come back to us after five to six years and say, "I wonder if it's worth paying for all these options I'm not using." They're right. Often, when they join, we had offered them more economical coverage, but the protection they were used to have in their home country or with a corporate package has caused them to take out a plan which is too comprehensive.
Our advisors will explain how to lower your bill without jeopardizing the quality of your coverage. If you have any questions about deductibles, co-insurance, emergency or hospitalization coverage, just ask them.
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