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Projected Medical Inflation in Hong Kong Exceeds 8% This Year

Medical inflation refers to the continuous rise in the costs associated with medical services and medications. In simple terms, healthcare costs are rising, including outpatient services, medications, hospitalization, surgeries, and rehabilitation. In fact, medical inflation is a global phenomenon. According to the WTW Global Medical Trends Survey 2024, global medical inflation is projected to decrease from 10.7% in 2023 to 9.9% in 2024. However, Hong Kong’s medical inflation seems to be on the rise, expected to reach 8.36% this year, marking four consecutive years of increases.

• Average Surgical Cost

  Average Hospitalization Cost

• type of Hospitalization

  2021(HKD)

  since 2017(%)

  2021(HKD)

  since 2017(%)

• Private Room:

  $143,016

  +39.9%

  $57,657

  +22.4%

• Semi-Private Room:

  $143,016

  +62.6%

  $34,396

  +51.6%

• General Ward:

  $61,910

  +50.1%

  $25,775

  +40.3%

Source: Hong Kong Federation of Insurers²

According to Table 1, based on claims data published by the Hong Kong Federation of Insurers, the costs of private hospital admissions and inpatient surgeries have been steadily increasing. Over the past five years, as of 2021, the average billed amount for hospitalization has risen by nearly 40%, with the most significant increase seen in semi-private rooms, which have accumulated a rise of over 62%. Ordinary rooms follow with a 50% increase, while private rooms have also risen by nearly 40%.

Additionally, the average billed amount for inpatient surgical fees charged by doctors at private hospitals has also been increasing. The amounts for private rooms, semi-private rooms, and ordinary rooms have risen between 22.4% and 51.6% during the same period, with the largest increases observed in ordinary and semi-private rooms, reaching 40% to 50%.

Key Drivers of Rising Medical Costs: Aging Population and New Technology

As the aging population continues to grow, it places an increasing burdens on public hospitals, prompting many to seek care in private facilities. Additionally, urban lifestyles often include unhealthy habits—such as overeating, lack of exercise, insufficient sleep, extreme stress, and excessive alcohol consumption—have led to a rise in chronic conditions like hypertension, high cholesterol, increasing incidence of high blood lipids, and associated issues like insomnia, anxiety, and mental tension. This trend increases the likelihood of individuals requiring medical treatment.

While advancements in medical technology significantly enhance patient survival rates, they also introduce higher costs for these innovative treatments and medications. Healthcare providers frequently review and adjust their fees, directly contributing to medical inflation.

How Are Insurance Companies Responding? One in Four Medical Insurance Plans Increasing Premiums

Medical inflation doesn’t only impact patients; it affects everyone. Rising medical costs increase the financial burden on patients and lead to higher insurance premiums. Additionally, some individuals misuse their company health insurance benefits by claiming for non-essential medical or cosmetic procedures, which indirectly raises insurance costs. As the saying goes, " fleece comes off the sheep's back." If insurers' operational costs rise, those costs will ultimately be passed on to consumers.

According to 10Life statistics, as of June this year, one-quarter of medical insurance plans have increased their premiums, with nearly 70% of those increasing by 5% to 10%. Some products have seen increases exceeding 20%. The number of plans with premium hikes has risen by approximately 60% compared to the previous year. While these increases may alleviate some pressure on insurers from rising operational costs, they also reduce competitiveness in the market. Different insurance companies are employing various strategies to address this dilemma, such as implementing different pricing strategies and actively managing risk pools. Furthermore, to mitigate misuse, insurers typically apply the principle of "reasonable and customary" when processing claims. Generally, insurance companies reference data from private hospitals, medical reports, and claims history to determine compensation. If a claim exceeds the "reasonable and customary" medical expenses, insurers may not cover the full amount, leaving the insured responsible for any costs above that threshold.