The analytical team from CGS International Securities (Thailand) or CGSI has highlighted in their research that the Thai government’s upcoming policy, effective from March 1, 2025, will introduce a co-payment condition in the range of 30-50% of medical expenses. This will apply to insured individuals who utilize benefits beyond necessary limits, defined by specific conditions.
The co-payment targets insured persons who file outpatient claims for minor illnesses three times or more and have annual claim rates exceeding 200% of their insurance premiums. It also applies to inpatient claims at 400% of insurance premiums, excluding claims for severe diseases or major surgeries. However, these co-payment terms will only apply to health insurance policies purchased or renewed after March 1, 2025.
CGSI believes that this co-payment condition will mitigate the moral hazard of excessive and frequent health insurance claims. It will encourage both insured individuals and their attending physicians to carefully consider the necessity and costs of treatment. Consequently, this may lead to more judicious decision-making and treatment planning. Furthermore, co-payments could help reduce unnecessary claims, potentially lowering insurance premiums and contributing to the insurance industry’s financial stability.
An assessment by CGSI of six hospital operators studied—BDMS, BH, BCH, CHG, PR9, RAM—illustrates that BDMS likely holds the highest proportion of income from self-insured patients at 31% of medical revenue for the first nine months of 2024, followed by PR9 at 27%, with BH having the lowest at 19%. CGSI predicts that co-payment implementation would impact net profit forecasts of these companies by only 1-2% in 2025 and 2-3% in 2026, which is relatively minor and therefore not included in current projections.
Notably, the medical sector significantly underperformed the market in the fourth quarter of 2024 due to heavy foreign investor sell-offs. Concerns about the slowdown in medical tourism and weakening profit outlooks led to a 20% decline in the medical sector from the end of the third quarter, compared to a 6% drop in the SET index. Despite this, CGSI recommends an “Overweight” investment stance in the medical group, selecting BH with a target price of THB 297 and BCH with a target price of THB 19.70 as the top picks.
The positive factors expected to support stock prices in this sector include the return of foreign patients and patients from Kuwait. However, there is downside risk if patient numbers significantly decline following the co-payment enforcement, or if the Kuwaiti government delays listing Thai hospitals eligible for state healthcare reimbursement.
