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Hospitals win, insurers lose as medical claims surge on rising costs
As the number of health claims rise, industry analysts are urging insurers and hospitals to review their risk-sharing schemes to avoid transferring the burden from the former to the latter, among other measures.
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A doctor examines a dengue fever patient on March 8, 2024 at Sunan Kudus Islamic Hospital in Kudus, Central Java. (Antara/Yusuf Nugroho)
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ising medical fees are allowing hospitals to see healthy growth in their bottom line but have also led to a surge in insurance claims, which firms and researchers say could pose a greater risk to insurers.
Private life insurance companies paid out claims totaling Rp 162.8 trillion (US$10.15 billion) last year, 6.8 percent lower compared to 2022, according to data from the Indonesian Life Insurance Association (AAJI). Over the same period, however, they saw a 24.9 percent year-on-year (yoy) increase to Rp 20.8 trillion in medical claims, which are payable to hospitals.
Insurers are seeing a surge in medical claims amid lagging premium growth, with the ratio increasing over the three months from September to December 2023 from 122 percent to 138 percent, respectively. This means insurers are spending more money on paying claims proportionate to the amount of premium payments they collect from subscribers.
The Financial Services Authority (OJK) forecast the trend would continue this year and urged relevant parties, including the Health Ministry, to work together in mitigating further risks to insurers.
Publicly listed insurer MSIG Life revealed that health and death claims increased 20 percent yoy over the first three months of this year, while insurer Generali Indonesia reported 9.72 percent combined growth for the two types of claims during the same period.
The AAJI explained that high medical inflation affecting treatment and services, including operating costs, medicines and health examinations, was behind the surge in medical claims.
“If those costs continue to grow, the rise in medical claims is expected to continue throughout this year,” AAJI executive director Togar Pasaribu told The Jakarta Post on Wednesday, noting that the association was still collecting first-quarter figures.
