Jun
28
Boosting Big Investments in “BRIC”
Filed Under Health Insurance, Hong Kong, Insurance Company, International Healthcare, Life Insurance, Medical Insurance, USA Health Insurance, Uncategorized | 1 Comment
As the economies of Brazil, Russia, India and China continue to grow, increasing numbers of international insurance and reinsurance companies are seeking to enter into these burgeoning regional markets. As some of the most recent international insurers to tap new country markets have found out, not only must they balance short and long-term strategies, but also provide appropriate and appealing products to local populations, sometimes even in the middle of shifting regulatory environments.
Just last week, at the Insurance Day Conference in Bermuda, Joe Plumeri, CEO and Chairman of Willis Group Holdings, spoke about the importance of maintaining growth in the Indian health insurance market along with the markets of Brazil, Russia, and China, or the “BRIC” countries as they are sometimes called. He stated that due to these countries’ developing populations, “the wealth and insurable value that an exploding global middle class will create will be unprecedented in history. The resulting demand for insurance will dwarf the capital and capacity of today’s insurance market.” Plumeri emphasized that “the new middle class will need brokers that understand them and their industries. They’ll need carriers who are innovative, financially secure, and who are there when they need them-carriers with a reputation for paying legitimate claims quickly.” A report published by Standard and Poor’s this week reaffirmed his opinion, with S&P credit analyst Magarelli stating that India’s “non-life sector, which includes property/casualty and health insurance, has one of the lowest penetration rates in Asia.” Again asserting Plumeri’s opinion on what customers will need from carriers, Magarelli proclaimed that in order to maintain the growth of the Indian insurance market, insurers need to start focusing more on key factors such as customer service, innovation, and efficiency; currently, “the insurers’ persistently poor underwriting performance..could potentially stunt the industry’s growth if it remains unchanged.”
As the demand for insurance in Brazil grows, The Travelers Companies Inc has just purchased 43 percent of Brazilian insurance company J. Malucelli Participacoes em Seguros e Resseguros SA for US$410 million, with the opportunity to increase its stake in the company to 49.9 percent over the next 18 months. As J. Malucelli already commands 30% of Brazil’s largest market, it is no surprise that Vice Chairman and head of Traveler’s Financial, Professional, and International Insurance business segment Alan Schnitzer said that J. Malucelli’s “extensive customer base provides us [The Travelers Companies, Inc.] with an exceptional platform for expanding the joint venture beyond the surety business into the growing property and casualty market.”
In accordance with projections for growth in Malaysia’s insurance sector, Zurich Insurance Company Ltd has just purchased Malaysia’s Assurance Alliance Bhd, a subsidiary of MAA Holdings Bhd, in full. A financial holding company, MAA offers general and life insurance, reinsurance, property management, investment advising, and more; Zurich purchased the general and life insurance sectors of the company. The sale comes a few months after Dan Bardin, Zurich’s chief executive of Global Life Asia Pacific and the Middle East, disclosed that the company was interested in expanding in Malaysia, saying that now is a “great time” to focus on expansion in Asia, although it can be “an enormous task to integrate.” Unfortunately, the sale effectively removed the basis of MAA, resulting in the quick descent of MAA’s shares on the Bursa Malaysia Stock Exchange from 5 sen to 67.5 sen on a volume of 32.63 million shares. MAA is also suffering other monetary issues, as without adequate internal funding, the company may not be able to pay their final principal payment of RM140 million. Whether or not they are able to do so will depend on the profit made from the RM344 million (US$114 million) sale to Zurich.
Bardin has reported that the company is also interested in expanding to Singapore and Taiwan. Contrary to S&P credit analyst Magarelli’s opinion that India has “one of the lowest penetration rates in Asia”, Zurich Regional Chairman of Asia/Pacific and the Middle East Geoff Riddell has reported that the company is currently not looking at expanding to India due to the competing prices caused by large private life insurers entering the market already. In March, Warren Buffett’s Berkshire Hathaway entered the Indian insurance market to sell automobile policies for Bajaj Allianz General Insurance, while New Zealand/Australia insurance giant IAG currently owns a 26 percent share of the Indian sector of its business alongside the State Bank of India.
Managing Director of Swiss Reinsurance’s Corporate Solutions Division Ivan Gonzalez elaborated on Swiss Re’s goals for expansion in the future in an interview last week. With 80% ownership of Brazilian insurance company UBF Seguros, Swiss Re has already gotten a footing in the Latin American insurance market, but they hope to use this ownership to expand in and out of Brazil; to grow the company “as a business”. With an eye on the other three largest Latin American markets-Mexico, Chile, and Columbia, Swiss Re is also opening an office in Miami, in order to “be closer to the Latin America market”, Gonzalez said.
Locally, Hong Kong is also trying to maintain its global financial foothold, as the Hong Kong government has begun to talk about creating an independent insurance authority; its aim will be to enhance “regulation and development of the insurance industry”, the government said. Secretary of Financial Services and the Treasury KC Chan also stated that the authority will “reinforce Hong Kong’s position as an international financial center.”
It is clear that companies will continue expanding into Brazil, Russia, India, and China, but only time will tell if they will be able to provide customer service that will maintain a good relationship between these countries and their new insurers.
Insurance Companies Mentioned:
Zurich: Although its headquarters are in Switzerland, Zurich services customers in more than 180 countries, providing insurance for markets in North America, Europe, Latin America, and the Asia Pacific. In North America, Zurich is the second-largest provider of commercial general liability insurance and the fourth-largest commercial property-casualty insurer.
Swiss Reinsurance: As the second-largest re-insurer in the world, Swiss Re maintains a presence on all continents, providing reinsurance for Property and Casualty and Life and Health related issues, as well as risk management services for corporations.
Bajaj Allianz Insurance Company: A joint venture between global insurance giant Allianz SE and Bajaj Finserv Limited, one of the 2 and 3 wheeler manufacturers in the world, Bajaj Allianz offers health, child, and pension policies in more than 1,200 offices across India.
J. Malucelli Seguradora SA is a Brazilian insurance company that provides surety insurance.
Malaysian Assurance Alliance Holding’s Berhad (MAA Bhd) is a financial holding company that provides financial services and insurance in South Asia, dominating in Malaysia while also establishing a presence in Indonesia and Malaysia.
Berkshire Hathaway: Under CEO Warren Buffet, Berkshire Hathaway manages many subsidiary companies, including Geico Auto Insurance, and can also provide financial planning help.
UBF Seguros: is a small Brazilian insurance company that provides agricultural and surety insurance.
Willis Group Holdings: As one of the world’s leading insurance brokers, Willis provides professional insurance services, reinsurance, risk management, financial and human resource consulting, and more in almost 120 countries.
The Travelers Company: One of the largest American insurance companies and the largest writer of US property-casualty insurance, The Travelers Company provides personal, business, financial, professional, and international insurance and ranks 106 on the Fortune 500 list.
Jun
16
At the end of May, The Office of the Commissioner of Insurance (OCI) released provisional statistics detailing the Hong Kong insurance industry’s positive market performance in the first quarter of 2011. One particularly notable development mentioned was the increasing proportion of business accounted for by visitors from mainland China.
Hong Kong – a special administrative region (SAR) of China – is the leading insurance center in Asia, attracting many of the world’s top insurance companies. Hong Kong has the largest number of authorized insurance companies in Asia at 167 and thousands of supplemental agents and brokers. In 2009, the insurance industry’s HK$184.6 billion income (US$23.68 billion), accounted for about 11.3 percent of the Hong Kong Gross Domestic Product.
The total gross written premiums of the Hong Kong insurance industry for the first quarter of 2011 was HK$56.3 billion (US$7.22 billion), which represented a 13.3 percent increase over the corresponding period in 2010. The gross and net premiums of general insurance business rose 11.2 percent to HK$10.3 billion (US$ 1.32 billion) and 8.4 percent to HK$7.0 billion (US$0.9 billion) during this period although underwriting profit reportedly declined from HK$559 million (US$71.7 million) to HK$482 million (US$61.84 million).
According to the OCI, ten percent of all insurance premiums collected were from policies issued to Mainland Chinese visitors. Mainland activity has been particularly apparent in new office premiums, amounting to HK 1.7 billion (US$218 million) in business during the first quarter.
Hong Kong Federation of Insurers (HKFI) reported that demand from Mainland customers would drive between a 20 to 30 percent annual growth rate in the country’s total premiums. Visitors from across the border have already purchased policies this year worth HK$168.3 million (US$21.59 million), or 9.9 percent of the SAR’s HK$1.7 billion (US$218 million) in total premiums. These figures already amount to more than half of what was paid in premiums by Mainland Chinese clients for the whole of last year. In 2010, The HKFI recorded insurance policies bought by mainland Chinese worth HK$330 million (US$42.34 million), representing 7.5 percent of last year’s overall premiums of HK$4.4 billion (US$564 million).
Thomas Lee Mun-nang, chairman of the HKFI Life Insurance Council, explained in a newspaper interview that Mainland Chinese were becoming an increasingly lucrative source of income for Hong Kong insurance companies.
“Mainlanders are attracted by the variety of insurance products in Hong Kong, but may need to pay a higher premium than local policyholders due to life expectancy and health factors,” the chairman said.
Most policies held by Mainland Chinese in Hong Kong have been in either US or HK dollars. Yuan-denominated policies have been mostly held by speculative locals and accounted for only 6 to7 percent of total premiums last year. This is due to limited investment opportunities with the Yuan. Yuan linked policies in Hong Kong have a short tenure of three to five years and have offered minimal returns of between 1 and 2 percent.
As China has become the second largest economy in the world, a middle class population with some capacity to spend outside its borders has grown to be a foundation of the remarkable economic dynamism lifting the country. This emerging investor class presents significant opportunities to financial markets like those in Hong Kong that are of close proximity and particularly convenient to them. In addition to the China’s gradual capital liberalization, Hong Kong’s insurance industry and professionals will benefit from the recent CEPA agreement to gain greater access to the mainland’s insurance market. HK-based insurance companies that can present innovative, cost-effective and fiscally secure insurance products and services not yet available on the mainland will be rewarded with a tremendous potential client base.
Earlier in the year however, we discussed some of the pitfalls involved in the relationship between the two regions. An influx of Mainland Chinese mothers seeking to give birth in Hong Kong in recent years has placed an undue burden on the SAR’s healthcare system. These women either arrive to escape the mainland’s notorious One Child Policy or to become early participants in Hong Kong’s more robust public services. This practice, known as Maternity Tourism, has Hong Kong authorities scrambling to control the number of pregnant Chinese nationals entering the city.
Organizations Mentioned
The Hong Kong Federation of Insurers
The Hong Kong Federation of Insurers (HKFI) was established on 8 August 1988 as a self-regulatory body of insurers, designed to further the development of the insurance business in Hong Kong. The HKFI is recognized by the Government of the Hong Kong Special Administrative Region as the principal representative body of their industry.
Apr
7
ACE Group Completes Acquisition of New York Life’s Hong Kong and Korean Holdings
Filed Under Hong Kong, Life Insurance | Leave a Comment
ACE Limited, the Swiss insurer operating in over 50 countries, has successfully completed the acquisition of all shares in both New York Life’s Hong Kong and South Korean wholly-owned life insurance subsidiaries for a combined US$425 million in cash. The purchase agreement between the two conglomerates was initialized in October 2010 and further amended to permit separate closings for NY Life’s Korea and Hong Kong operations. The Korean half of the transaction closed on February 1st for US$75 million and the sale of the Hong Kong operations was finalized April 1st for US$350 million. Purchase was funded exclusively through ACE Limited’s available cash reserves, involving no financing contingency.
ACE already had a strong presence in Hong Kong and South Korea through property and casualty insurance services (P&C) but has been looking for an entryway into the local life insurance markets and growth through the acquisition of established NY Life operations. ACE will incorporate the newly purchased businesses into their existing local infrastructure, which already involve US$2.15 billion in assets, more than 2,400 captive agents and earnings of US$330 million in incremental life insurance revenues. ACE’s preexisting Asian life insurance businesses include operations in China, Indonesia, Thailand and Vietnam. In October the group entered the Malaysia life insurance market through the US$210 million acquisition of Jerneh Insurance.
The Chairman and Chief Executive Officer of ACE Limited, Evan G. Greenberg commented on the deal: “We are pleased to complete this transaction, which adds the important and dynamic market of Hong Kong to our growing international life insurance franchise,” adding that “Together with our recent acquisition of New York Life’s business in Korea, the addition of a life company in Hong Kong expands our presence in Asia and complements the life insurance business we have been growing organically in the region for the last six years.”
ACE’s success in managing international life insurance businesses coupled with their expertise and existing infrastructure within the Hong Kong and South Korean insurance markets will support the company’s growth targets and maintain operational efficiencies through the transition period. Through 2009 New York Life’s Hong Kong and South Korean branches had 2,448 insurance agents, and a combined 234,505 policyholders generating total revenues of US$327 million. The acquisition of NY Life’s East-Asian holdings is projected to substantially boost sales in ACE’s Asian life insurance business (excluding the joint venture with Huatai Insurance Group in China) and diversify their existing premium base.
Speaking at the onset of the deal back in October, New York Life Chairman and Chief Executive Office Dick Mucci explained that the decision to leave the South Korean and Hong Kong markets was part of the company’s operational strategy: “While these are well-established businesses, New York Life has made the decision, as part of a strategic shift, to concentrate on our operations in the U.S., where we have the leading market share in life insurance, and on our markets in Asia and Latin America where we have strong market positions.” The chairman maintained that this transaction would not affect the quality of cover available in the region: “Consistent with our commitment to policyholder safety and security, ACE Group is a respected and well established global insurer with a strong balance sheet and robust ambitions for growth in Asia.”
New York Life continues to maintain operations in India, Taiwan and Thailand. In January, the company announced that it was selling the remaining 25 percent stake it held in it’s Shanghai-based joint venture, Haier New York Life, to Meiji Yasuda Life Insurance. The global life insurance industry still presents opportunities for growth. According to the most recent annual report, in 2009 New York Life derived 21 percent of its life insurance business from international markets.
Insurance Companies Mentioned
ACE Group
The ACE Group is one of the largest providers of commercial property and casualty insurance in the world. With its core operating insurance companies rated A+ for financial strength by Standard & Poor’s and A.M. Best, and with nearly US$78 billion in assets and more than US$19 billion of gross written premiums in 2009, the ACE Group is distinguished by its underwriting expertise, superior claims handling and global franchise, and has a physical presence in 53 countries and commercial and individual customers in more than 170 countries.
New York Life
The New York Life Insurance Company is one of the largest mutual life insurance companies in the United States, and also operates in India, Mexico, Thailand, China and Taiwan. The Fortune 100 Company was started in 1845, and is headquartered in New York, New York. New York Life sells life insurance, retirement income and investment products, as well as long-term care insurance.
Mar
31
Maternity Tourists Strain Healthcare Services
Filed Under China, China insurance, Healthcare, Hong Kong | 7 Comments
Hong Kong, this week, has again raised the issue of so-called “maternity tourists,” and is questioning how to best fix the strain that an influx of Chinese mothers seeking to give birth in the city is placing on the SAR’s healthcare system. Following hot on the heels of the announced closure of a Maternity House in San Gabriel California, Hong Kong authorities are looking for options which would allow them to further control the flow of pregnant PRC nationals into the city.
Recent figures from the Hong Kong Hospital Authority and Department of Health have revealed that mainland mothers accounted for approximately 40,000 births in Hong Kong during 2010; roughly 46% of the city’s 88,000 total. This is a massive increase from the “few hundred” births from 2004 – 2005, and is set to rise even further in 2011 and again in 2012, with healthcare officials projecting the numbers at 92,000 and 100,000 respectively.
In 2007 the Hong Kong government introduced legislation which prevents women past the 28th week of pregnancy from entering the city without providing proof of a booking at a local hospital. In addition to this, the government later introduced mandatory pricing for non-resident mothers seeking to give birth in one of the city’s public hospitals; and while these initiatives were initially successful at stemming the tide, China’s recent, and explosive, economic success has again seen the numbers move upwards.
For Chinese nationals there are a number of reasons for giving birth outside of the People’s Republic, not in the least of which is the country’s notorious “One Child Policy.” The legislation severely penalizes families who have more than one child, and in the case of Guangzhou the fines associated with having a second baby can be as much as RMB 180,000 (US$ 27,450). In order to avoid the fines, while still being able to have a second, or even third child, many mainland parents are simply choosing to travel abroad to give birth.
However, while laying the blame at the feet of the “One Child Policy” may be conveniently easy, there are a number of more in-depth social factors which may be playing a role in the rapid development of the Chinese Maternity Tourism trend. One of these is to do with the way that the PRC’s education system is structured.
In China, as elsewhere around the world, there is high concern from many parents regarding their child’s education. Due to the way in which the PRC’s school system is set up, if the child has a Chinese passport and/or residency in certain districts or states, the standards they need to reach in order to access the top schools is prohibitively high – they will need to score extremely well on both the middle and high school entrance exams. It is important to bear in mind the fact that China has a population of approximately 1.3 billion people, and as such competition for the best schools in the country is extremely stiff.
However, one of the major loopholes to this system is through the child possessing a foreign passport, or official residency outside of China, in this case Hong Kong. If the child is not a Chinese passport holder, and does not have official residency in China, then the standards of entry into the country’s most prestigious educational facilities are dramatically lowered. In this case the child is treated as an “international” student, rather than a local one; although the family must pay the high fees associated with this status. In fact, some Chinese families have gone on record saying that they will raise their infant in China until the child reaches high school age, and then send them to Hong Kong to continue their education.
Outside of the Hong Kong healthcare system, the potential strain on the city’s educational services is highly concerning. As with healthcare, Hong Kong has a public education system through which the children all permanent residents are allowed to receive their schooling. While competition for places at Hong Kong schools may be less stiff than across the border, the city has been experiencing severe issues with increasing class sizes and a lack of spaces for secondary students.
One option then is that the Chinese maternity tourists will send their children to private educational institutions within the city, and when looking at the costs involved with a non-resident mother giving birth within Hong Kong, this may not present as much of a significant financial challenge as one may think.
According to one recent interviewee, the Chinese husband of a PRC Maternity Tourist, he paid HK$ 80,000 (US$ 10,272) for a C-Section maternity package at a private hospital in Hong Kong. The package included antenatal medical checkups in the city. The source is quoted as saying that, even were the HKSAR government to impose further restrictions on public hospitals within the city, this would not pose a problem at private maternity hospitals, such as the Matilda, Sanatorium, or Baptist; primarily due to the fact that local Hong Kong mothers vastly prefer the services offered through the low-cost public system.
The increased preference of Maternity Tourists for the city’s exceptional private medical facilities has highlighted an alarming issue with the Hong Kong medical community. Currently the Hong Kong Public Healthcare system is experiencing an alarming shortfall of qualified medical professionals, with many moving from public facilities to private institutions. This has left the city’s public medical community severely short staffed, to such an extent that there have been calls to allow overseas medical practitioners, who have not passed the Hong Kong medical exam, to practice within Hong Kong public hospitals.
Additionally, the flood of doctors away from the public system has emphasized a serious supply concern; as private medical facilities receive more bookings, and expand ever further, the costs associated with treatment are likely to increase. This does not bode well for a city whose private medical costs are tied with Israel for being the second highest, on average, in the world; the USA is, of course, the most expensive place to receive healthcare treatment on earth.
Outside of medical pricing, there are additional problems posed by the Hong Kong public medical sector’s “brain drain;” namely that, public hospitals within the city are vastly more prepared to handle any complications arising from a pregnancy. For example, Prince of Wales hospital, one of the city’s most well regarded public healthcare facilities, in the last two years lost more than 10 senior doctors (including obstetricians) to the private sector. Prince of Wales hospital is also one of the few hospitals in the city which is able to offer comprehensive intensive care to newborns in the event of a complication of pregnancy, which will occur in roughly 2 out of every 100 births in Hong Kong.
The move of qualified medical practitioners away from the hospital means that, given enough time, such facilities may simply not be able to handle the treatment associated with complications of pregnancy, and will not be able to offer local mothers the treatment which has long been promised to them.
Hong Kong’s close proximity to China has seen the city bear the brunt of the Birth, or Maternity Tourism trend for most of the phenomenon’s existence. However, as recent events, such as the closure of the San Gabriel “Maternity House,” show, mere proximity is not the underlying cause, and distance will not ensure protection. While local policy makers are stating that a flat ban on maternity tourists would be unacceptable, they are asking how the situation can be resolved.
Dr York Chow, Hong Kong’s Secretary for Food and Health, has said that he is keen to liaise with both the public and private sectors to improve the outlook for healthcare in Hong Kong. However, the Private Hospitals Association president, Dr Alan Lau, has said of any potential legislation or reforms, “we are willing to discuss the matter and strive for good quality of care … but any drastic measures contradicting the free market would be regrettable. The government would need good justification to limit our maternity beds.”
As such, it is highly likely that yet another mandatory rate increase on non-resident mothers giving birth in Hong Kong public hospitals is on the cards. Local mothers can expect the government to act in their interests and protect public healthcare services, and the accessibility of those services to pregnant residents. While any legislation would potentially avoid instituting stringent requirements on Hong Kong private hospitals, due to the city’s commitment to free-market principals and standing as the world’s freest economy, simple supply vs. demand suggests that medical inflation within HKSAR is not set to decrease any time soon. With the growing demand for private hospitals and private medical services, the sector could see a record pay day and increased costs at the expense of HK residents, in favor of mainland mothers who are prepared to pay for the best services available.
Mar
30
US Maternity Medical Tourist Situation Mirrors Hong Kong
Filed Under China, China insurance, Expat Insurance, Health Insurance, Healthcare, Hong Kong, Medical Insurance, USA Health Insurance | 1 Comment
American authorities have announced the closure of a “Maternity House” in the Californian city of San Gabriel, according to a New York Times report published March 29th, 2011. Neighborhood residents had complained repeatedly about the excessive noise coming from a local building, and the large number of pregnant women seen entering and exiting the area. Police officers and building inspectors discovered that the building was a center for Chinese medical tourists, who were using the home as a means to deliver their babies in the USA, thereby granting the child American citizenship. This situation is by no means unique to the USA as Hong Kong, for many years, has experienced a massive influx of mainland mothers looking to give birth within the city.
There are a number of reasons which can be used to explain the increase in Chinese mothers traveling abroad to give birth. One of these is with regards to the People’s Republic’s notorious “One Child Policy,” stating that Chinese nationals, within China, are only allowed to conceive, and give birth to, one Child. By going overseas to deliver, the mother is able to escape the bounds of Chinese legislation, and potentially have an additional baby upon return to her home nation.
The second reason for going overseas to give birth is more to do with having a form of “insurance” against untoward changes within the People’s Republic of China. In the case of the USA, any child born within the bounds of America’s borders automatically becomes a Citizen of the USA under the 14th amendment. Once the child is 21 years of age, they are then a full citizen of the country, and are able to petition the government to allow their parents to join them as residents of the US.
In Hong Kong this situation is paralleled, mainland mothers giving birth within the HKSAR gain their child “Right of Abode,” and consequently Permanent Residency; in addition to being granted the privilege of living in one of China’s most prosperous cities as their child’s guardian. While technically a part of China, Hong Kong operates under the “One Country, Two Systems” principal, and immigration of PRC nationals to the city is tightly controlled. By having a child in Hong Kong, the families of these children are able to ensure that they will not be deported for illegal immigration or visa over-stay infringements.
However, Hong Kong, unlike the USA, has healthcare system which is predominately public in nature. While private healthcare services and hospitals do exist in the city, the majority of residents receive their medical treatment through low cost, government run healthcare facilities. With a large number of pregnant mainland mothers using the maternity facilities at public hospitals within Hong Kong there was a serious strain placed on the city’s healthcare services. In some cases Chinese mothers accounted for more than 30 per cent of all deliveries at certain hospitals within Hong Kong.
In fact, this situation progressed to such an extent in Hong Kong that in 2008 the city’s government passed legislation introducing mandatory pricing for non-resident mothers wishing to give birth in Hong Kong public hospitals. Non-resident mothers who have booked their delivery in a Hong Kong public hospital are now required to pay a minimum booking fee of HK$ 39,000 (US$ 5,005.82) for a three day, two night maternity package. Non-resident mothers who have not booked a hospital bed, in other words, walk-ins, are charged HK$ 48,000 (US$ 6,161.06). The costs here do not include any complications of pregnancy, but are only for a routine delivery, and even then represent the minimum amount that a non-resident mother can be expected to pay; for Chinese nationals this no mean sum, as the nation’s average annual income is a paltry US$4,520.
Further to this, the Hong Kong government has not made any specific legislation with regards to the city’s private maternity hospitals, where the average maternity costs for a routine delivery are in the US$ 8,500 range; a cesarean section, or c-section, at the same hospitals will typically be priced at US$ 12,838. In comparison, the USA federal average for a routine child delivery comes in at roughly US$ 7,600.
As can be seen from the costs involved, the women undertaking this Medical Maternity Tourism phenomenon are clearly not from the lowest strata of Chinese society. With Chinese companies offering one-stop maternity tourism services from between CNY 50,000 – 90,000 (US$ 7,623 – 13,721), it is evident that these women, and their families must be, at least, slightly well off.
This then poses the question of why, exactly, the rate at which Chinese mothers are traveling overseas to give birth is increasing.
In recent years the PRC’s Central Government has made extraordinary strides towards improving the standards of the nation’s healthcare system and services; going so far as to introduce a comprehensive private China health insurance system, and stepping up much needed overhauls of the country’s top hospitals. In many cases China is able to offer private medical services which are on-par with, if not exceeding, those of their western counterparts. Hospitals like Parkway Shanghai are able to deliver some of the highest standards of medical treatment within the People’s Republic of China, and while they mainly serve foreign national expatriates, do cater services to Chinese residents.
The reason for this development then cannot be the quality of care, or even the cost of treatment, as these are both adequately covered within the People’s Republic. Additionally, unlike the furor over “Anchor Babies” within the USA, the Chinese mothers in question often return home after giving birth, and are usually in possession of above average financial means.
The issue of Chinese mothers giving birth in the USA is baffling American immigration experts, who say that the women are not acting in violation of current American laws. However, as in Hong Kong, there is apparent anger towards the trend. From the New York Times story:
“These people aren’t doing anything in violation of our laws,” said Mark Krikorian, the executive director of the Center for Immigration Studies, which advocates tougher immigration controls. “But if anything, it is worse than illegal immigrants delivering a baby here. Those kids are socialized as Americans. This phenomenon of coming to the U.S. and then leaving with people who have unlimited access to come back is just ridiculous.”
While there are many women from Asian nations participating in similar activities, such as South Korea, the Philippines, and India, it is Chinese mothers who are driving the trend. Not only are these mothers driving the trend, but their actions imply long term forethought towards the question of; where is it best to deliver my child overseas?
When looking at the American medical system the first thing which is immediately apparent is the need for some form of health insurance. Medical services within the USA can be prohibitively expensive, a much publicized and debated issue, necessitating some form of comprehensive health insurance coverage. However, it is important to realize that many insurers will impose a significant waiting periods on policy benefits such as maternity coverage. In some cases, the waiting period associated with maternity can be as long as 24 months from the start of a plan, although the norm would be closer to 12.
As such, it is obvious that these “Maternity Tourists” will have been planning their delivery trip for quite some time prior to departure. However, looking at the overall situation, it becomes much more complex than it can first seem.
Of those Chinese nationals and residents who do possess a health insurance policy, the type of policy prevalent within the population is “local health insurance.” These are medical insurance plans which are designed to work solely within a specific country, in this case China. These plans will not cover the policyholder overseas; while Hong Kong is considered to be a part of China, it is technically a separate national entity, so local China health insurance will not provide cover in the city, never mind the USA. However, in the case of Hong Kong, these maternity tourists tend to cover the costs related with the birth out-of-pocket.
American health insurance would then seem like an option; however, obtaining domestic USA health insurance to cover the costs associated with the birth is also a difficult proposition for foreign nationals, as an American residential address is typically required to access a plan. Looking at the waiting periods which will be involved, the logistics here would mean that the Chinese mother would have to be “resident” in the USA for a period which far exceeds the length of stay granted by her visa. As American immigration experts have cited the legality of this type of action, this is most likely not the case.
The last proposition for insurance coverage of the birth is with regards to international health insurance plans, which provide medical protection on a global basis. However, Chinese regulations, and the restrictions put in place by many of the major insurance providers operating on the mainland, mean that unless the Chinese citizen is an expatriate residing outside of their home country, they will be unable to obtain this type of policy. Due to the fact that American immigration experts cite the fact that many, if not all, of these mothers return to China after giving birth, having been abroad on temporary tourist visas, this is most likely not the case.
At the end of the day, it is extremely difficult for these mothers to fund their maternity tourism via insurance, which lends strong weight to the fact that they are paying for their maternity services out-of-pocket. If the USA is seeking options to resolve this potentially concerning issue, a price increase, or mandatory down payment such as that in place in Hong Kong may be a solution. In 2008, the year that “maternity tourism” began making headlines in Hong Kong, there were 7,462 babies born in the USA to foreign parents. Since then, the number of maternity tourists has only increased, and as China continues to generate more wealth, is likely to continue doing so.
Mar
25
Mergers Expected in Thailand Healthcare Sector
Filed Under Healthcare, Hong Kong, International Healthcare | 1 Comment
Industry analysts are expecting the increase in merger and acquisition activity in Thailand’s healthcare sector to continue. Thai healthcare providers are determined to integrate more with one another to give them a national competitive advantage over the large foreign multinationals now entering the market.
Under the ASEAN Economic Community (AEC) agreements, by 2015 many industries will be increasingly liberalized across the continent, including the private healthcare sector. Regional market integration will theoretically expand the local healthcare market to over 580 million people.
Khazanah Nasional, Malaysia’s state investment branch, has identified Thailand in particular as a healthcare market with great growth potential and would be aggressively pursuing opportunities in the region.
Pongsak Viddayakorn, board member at Bangkok Dusit Medical Services (BGH), Thailand’s leading hospital operator, explained: “The cash-rich Malaysian state investment firm is in the process of pitching acquisition proposals to almost all Thai healthcare providers, leading local players to look for accelerated consolidation to curb what is feared will be a foreign invasion.”
In July 2010, Khazanah Nasional won a fierce bidding war with India’s Fortis Healthcare to acquire Asia’s largest hospital operator: Parkway Holdings Limited of Singapore.
Mr. Pongsak predicts similar activity in Thailand: “The remaining smaller-scale players failing to bond with the local giants may be forced to team up with one another or else eventually sell out to foreign investors.”
BGH, aware of impending foreign competition, is committed to protecting its market share. In December 2010, the group acquired both the Phyathai Hospital and Paolo Memorial Hospital chains, 8 medical facilities in total, from the Health Network Group for a total of 12.6 billion baht (US$ 315 million). The acquisition is expected to be completed by the second quarter of 2011 and will expand the BGH hospital network to 27 facilities, with an estimated 20,000 a-day outpatient capacity once the merger is completed. This achievement has turned Bangkok Dusit into the second largest hospital group in the Asia-Pacific region outside of Japan.
The most recent acquisition in Thailand was made last week by Bumrungrad Hospital Plc (BH), the country’s second largest listed hospital conglomerate. On March 19th, BH purchased a 24.99% stake in Bangkok Chain Hospital Plc (KH), chief operator of Kasemrad Hospital Group, from developer Land & Houses Plc for 3.53 billion baht (US$ 116.7 million) at a share price of 8.50 baht (US$ 0.28) per share. BH has been subject to its own shareholding change recently. Last month BGH purchased an 11% stake in BH.
KH operates a health network of six hospitals under the Kasemrad brand, with approximately 1,240 beds and an operational capacity of 9,400 outpatients a day. Bumrungrad’s acquisition will expand their coverage and give it greater penetration into the growing Thai middle class market through the new locations in KH’s multi-facility network.
BH is now committed to extensive investments both in and outside of Thailand as part of their revised expansion strategy. Bumrungrad International was established in 2005 as a subsidiary to focus on advancing acquisition, development and management of medical delivery services throughout Asia and the Middle East. The firm has partnered with strategic international investors including Bangkok Bank plc, Hong Kong listed Asia Financial Holdings Ltd., Singapore’s Temasek Holdings and Istithmar World of Dubai. BH is currently working in conjunction with Asia Financial to develop a 500 bed private hospital in Hong Kong at a cost of US$ 300 million. The Hong Kong government is auctioning off four land plots for potential private hospital development. If their bid is approved, the project is expected to commence next year.
In Thailand, BH has outlined increased spending to increase the capacity of their medical facilities. 1.4 billion baht (US$ 46.3 million) has been earmarked for domestic infrastructure spending on top of the roughly 600 million baht (US$ 19.8 million) in annual costs attributed to equipment and facility upgrades. Through its international investment branch, the firm now operates 104 clinics and hospitals in 8 different markets.
The industry outlook for the Asia-Pacific region is good. The lucrative private healthcare market in Asia has become an increasingly important engine for growth. India, Singapore, Malaysia and Thailand have emerged as key medical tourism destinations for international clients. In addition to this, the rising level of disposable income among the native Asian populace has increased awareness of better quality of healthcare available through privately run medical sources as well as supplementary health insurance options. The low interest rate environment and improved knowledge of investment products are concurrently driving up demand for investment-linked insurance products, which are providing insurers in emerging markets in Asia with a significant scope for new written premiums.
Companies Mentioned:
Bangkok Dusit Medical Services
Bangkok Dusit Medical Services, together with its subsidiaries, operates a private hospital network in Bangkok, other Thai provinces and in Cambodia. The company was founded in 1969 and the first Bangkok hospital commenced operations in 1972. Private healthcare facilities include Samitivej hospital and BNH hospital.
Bumrungrad International
Bumrungrad Hospital Public Company Limited was founded in 1980 and is based in Bangkok, Thailand. The company’s primary activities are owning and managing hospitals. Its flagship facility, Bumrungrad International hospital, is a prominent medical centre attracting over a million patients annually and has been nominated as one of the world’s top ten international hospitals by Newsweek International.
Parkway Holdings
Parkway Holdings Limited is one of Asia-Pacific’s leading providers of healthcare services. Parkway operates a provider network of 16 hospitals with more than 3,400 beds throughout Asia, including Singapore, Malaysia, Brunei, India, China and the UAE. Parkway was first listed on the Singapore stock exchange in 1975.
Fortis Healthcare
Fortis Healthcare Limited, founded in 1999, is a leading healthcare provider with a network of 46 hospitals, satellite centers and heart command centers in India. The company also offers diagnostic, travel, IT and financial services through it’s’ wholly owned operation Religare Enterprises Limited.
Khazanah Nasional
Khazanah Nasional is the investment holding arm of the Government of Malaysia. The company acts as strategic investor in new industries and markets and manages these investments on behalf of the Malaysian government. The company became incorporated as a public limited company in September 1993 and began operations the following year. Khazanah holds investments in more than 50 companies, who are involved in many diverse industries including: banking, electronics, healthcare, manufacturing, and telecommunications.
Feb
15
Manulife Fourth Quarter Profits Driven By Results In Asia
Filed Under China, China insurance, Hong Kong, Insurance Company, Life Insurance | 4 Comments
The Toronto-based insurance company Manulife Financial Corporation has reported a positive turnaround in profitability in the fourth quarter of 2010. Earnings totaled close to US$1.8 billion, helped by sales in the burgeoning Asian region which showed a 56 percent increase in overall activity.
While action taken to stem earlier losses in 2010 improved performance in its key markets in the USA and Canada contributed to the production of the positive results, the strategic steps taken by Manulife to expand its operations in Asia were the key driver in the return to profitability in the fourth quarter of 2010.
Manulife’s Chief Executive Officer Mr. Guloien said: “We had strong growth in Asia, diversification in Canada and continued progress in the strategic repositioning in the U.S. We are proud of our continuing expansion and growing sales levels across Asia as a whole.”
Asia is emerging as the key target market for business growth as multi-national insurers look for long term expansion. This is linked to the exceptional growth in the economies of Asian nation’s off-setting the more difficult trading conditions in western hemisphere countries blighted by the implementation of austerity measures.
Manulife’s growth in the fourth quarter in 2010 is primarily down to a global strategy adopted by the insurer in 2009 which focused on driving up insurance sales especially in the buoyant Asian insurance market and growing distribution channels in emerging markets with the creation of a wider range of diversified saving and insurance products.
Manulife’s report on earnings achieved in the fourth quarter of 2010 highlights how much of a pivotal market Asia has become to global insurers seeking to generate written premium growth. While Manulife’s main domestic markets in North American have been basically static since the 2007-2008 global financial crisis, the Asian insurance markets have been a feature of the insurer’s profitable business in recent years, with the markets in China, Indonesia, Vietnam, Malaysia and the Philippines achieving double digit growth.
Speaking on Manulife Asian operations, Robert Cook, Executive Vice President and General Manager said: “Achieving insurance sales of US$1 billion was an important milestone for Manulife Asia. I am very pleased with these 2010 results, and I am also proud of the steps we took last year to invest for the future. These initiatives, aimed at building our distribution capacity in both agency and bank channels, are expected to pay off in continued growth of our businesses in the years ahead.”
Manulife’s Asian Division achieved fourth quarter insurance sales totaling US$307 million representing a 56 percent increase in quarterly year-on-year earnings. A significant 43 percent growth was achieved in fourth quarter 2010 Asian insurance sales, with the Japanese market achieving insurance sales totaling US$563 million – an increase of 72 percent compared to quarter four of 2009. Manulife’s strong growth in the Japanese insurance sector was down to robust sales of its new whole life products and an increase in sales of term life insurance products distributed through Manulife’s well established Japanese sales channels.
Manulife’s Hong Kong business reported insurance sales growth of 23 percent over the 12 month period in 2010 reflecting an increase in marketing efforts and growth in the agency distribution network.
In other Asian operations, Manulife’s insurance sales jumped by 22 percent in the fourth quarter 2010 compared with activity in the same period in 2009. The Canadian based insurer reported record growth in insurance sales in China, Indonesia and Vietnam.
The Chinese, Indonesian and Vietnamese insurance sectors have all become essential markets for insurers looking to expand global operations with new premium business being predominately driven by the improvement in wealth and rise in middle class demographics. Overall, Manulife’s insurance sales in China, Indonesia, the Philippines, Malaysia and Vietnam grew by 15 percent in quarter four 2010 compared to the equivalent period in 2009. Manulife has increased the number of contracted agents in these countries in order to ensure maximum exposure in the flourishing Asian insurance and wealth generation industries. In other Asian markets, Taiwanese sales grew by 53 percent over the yearly period in 2010, driven by successful sales in the whole life business. However, the loss of a distribution partnership in the developed Singaporean insurance market, meant Manulife experienced a steep decline in sales in this segment of the Asian business.
Manulife – one of North America’s largest insurers – targeted the Asian insurance market as a key strategic development in order to expand and generate improvements in profitability, which proved successful as demonstrated by the results in the latest report on earnings. This sector of business will clearly be a focus for activity in 2011 in order to turn the page on 2010’s overall loss of US$ 395 million, which stemmed from poor results in the first half of the year, and develop it into a platform of sustained profitability.
However, competition within the Asian insurance markets has become more intense recently, with European and American multinational insurers gaining access to the region through acquisitions, partnerships or self-started new businesses. These developments are initiating the provision of innovative insurance and wealth generation products in order to achieve market penetration.
As far as Manulife is concerned, in addition to targeting the Asian markets, it has repositioned activities in its significant USA and Canadian operations to meet the changing market conditions in these countries with positive results being manifest in the later part of 2010.
Insurance Company Mentioned:
Manulife
Manulife (International) Limited is a member of the Manulife Financial group of companies. Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 22 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners.
Feb
9
Swine Flu Kills 9 in Hong Kong
Filed Under Healthcare, Hong Kong, Swine Flu | 14 Comments
Swine Flu, the Influenza A variant which first made headlines around the world during 2009, has reemerged as a potentially severe threat within the Chinese city of Hong Kong in recent weeks. Since January 24th 2011 there have been 9 confirmed deaths due to Swine Flu infection in the city, and current Hong Kong Hospital Authority figures indicate that there are 38 patients in local hospitals seeking treatment for the disease.
Hong Kong is currently entering peak flu season after the coldest and driest winter on record. According to a recent study by doctors at the University of Hong Kong, the unusual weather conditions over the last few months have contributed to the spread of the disease as Influenza Type A variants thrive in cool, dry climates.
Swine Flu, which was initially identified in Mexico during April of 2009, has been responsible for approximately 18,000 deaths globally since it first appeared, according to the World Health Organization.
During the 2009 outbreak of the disease Hong Kong health authorities were placed on high alert; however, the major cause of Flu outbreaks in that year were not attributed to the Swine Flu Strain. This year over 90% of Flu cases reported in the city have been attributed to Swine Flu, which has posed concern to medical professionals in the region.
According to University of Hong Kong doctors the main threat posed by the Swine Flu Virus is with regards to the fact that it is radically different from other Influenza Viruses, with infected patients showing decreased levels of a vital antibody known as IgC2. The lack of this antibody in patients is making Swine Flu deadlier than other Flu strains this year, as the deficiency radically increases the chance of secondary infection from bacterial based illnesses such as streptococcus pneumoniae, and staphylococcus aureus.
Recently conducted studies have found that the Flu strain present in the city this year is a radically different variant from those seen in 2007 and 2008, but is much more similar to the 1918 Spanish Flu strain.
The Spanish Flu, which caused a global pandemic from 1917 – 1920, was responsible for an estimated 50 Million deaths world wide.
The latest reported Flu fatality in Hong Kong was a young boy, aged 14 months, who died in the Caritas Medical Centre located in Sham Shui Po. Presently it is unknown whether the child had contracted human Swine Flu, however if positively identified as the cause of death it would bring the total number of confirmed Swine Flu fatalities in the city to 10 since the middle of January.
The outbreak poses a grave concern due to Hong Kong’s status as a regional travel and shipping hub. An estimated 92,000 tourists and visitors flock to the city each day, pointing to the risk of the virus spreading overseas in its more virulent form.
It is not the first time that Hong Kong has seen the outbreak of a major infectious disease, with the SARS epidemic in 2003 originating in southern China eventually causing 775 deaths worldwide, of which 299 were in Hong Kong.
The total number of Flu cases within Hong Kong has been lower than expected since the start of 2011. However, according to health authorities this is primarily due to the fact that many local schools were closed over the Chinese New Year holiday. Health Authorities have warned that the incidence of flu cases will most likely increase as schools return from the break. The Centre for Health Protection controller, Thomas Tsang Ho-fai said that, based on past experience, any school based outbreak of the virus would most likely involve up to a dozen students.
The Centre stated that due to the risk posed to students, any school where a student has died from the Swine Flu virus should suspend classes for at least a week; going on to say that this rule should also be applied in the event that 100 cases of flu like symptoms are displayed within a single student body – even if there are no deaths.
Health Authorities in Hong Kong are currently recommending that any individual experiencing flu-like symptoms wear a surgical mask while outside the home, and consult a doctor as soon as possible. Any children displaying flu symptoms should be kept home from school.
In order to combat seasonal flu and the Swine Flu viruses the Hong Kong government is offering a vaccination subsidy scheme for qualified persons. More information can be found on the Hospital Authority Website.
Jan
19
Growing Crisis in Korean Health Insurance System
Filed Under Expat Insurance, Health Insurance, Healthcare, Hong Kong, International Healthcare, Medical Insurance | 6 Comments
A recent report conducted in Korea has indicated that the outlook for the near future of the Korean Health Insurance system is rather grim. The Health Insurance Policy Institute under the National Health Insurance Corp. (NHIC) estimated that by 2020, there will be a 16 trillion won (US$ 14 billion) annual deficit in this sector. This figure already assumes a steady increase in the insurance premium payments of salaried workers. Indeed, this is a red flag for the authorities to come up with some kind of radical reforms without further delay.
Korea’s universal health insurance system was started initially in 1977 and has been internationally recognised as the role model for public healthcare. However, the system has encountered some stumbling blocks, namely on the lack of financial support and an increasing number of old people in the country, hence a growing demand on medical care. Moreover, the local community has developed some bad habits in their use of the system, for example, too many people visit the clinics or hospitals even for common colds, causing doctors to over prescribe excessive medication as part of the treatment.
In 2009, there was a 3.2 billion won (US$ 2.9 million) deficit in the national health insurance account. By 2010, the gap has grown to 1,299 billion won (US$ 1.1 billion), 400 times greater than the previous year. According to the NHIC, the main reason being that they have included broader coverage of more illnesses and their treatment methods. The research centre of the insurance corporations estimated that such deficits will only continue to grow as the costs charged by the medical service providers are rising at a pace where the incoming revenue cannot come close to covering them. It is estimated that by 2030, the expenses will increase 3.3 times, from 41 trillion won (US$ 37 billion) to 137 trillion won (US$ 123 billion) while the income from insurance premiums will rise about only 2.1 times during the same period. Insurance payments for people at the age of 65 or above will increase from 13.4 trillion won (US$ 12 billion) in 2011 to 32 trillion won (US$ 29 billion) in 2020 and eventually to 70.3 trillion won (US$ 63 billion) by 2030. This equates to 50% of the total healthcare expenses. These estimates are based on the assumptions that the current coverage of illnesses by insurance, insurance premiums and payments to medical institutions remain the same.
If the payments to medical institutions for treatment increase by 2.5% annually, then by 2030 the total healthcare payments are estimated to increase from 137 trillion won to 180 trillion won. Taking into account the current 20% subsidy from the Government, by 2030, employees contributions towards insurance premiums will increase to 11.7% of their salary.
To put a stop on the financial burden of Korea’s insurance system, the following solutions were proposed for consideration by the research institution:-
i) Put in place regulations to ensure that it is mandatory for an individual who earned income to make contributions to their own insurance premiums. Review the criteria on the dependents of insurance policyholders, to ensure that there are no loopholes in avoiding making premium payments.
ii) Increase taxes on the sales of tobacco and liquor.
iii) Review the investigation process and take preventive measures to stop dishonest medical service personnel from defrauding the system.
iv) The Ministry and Health and Welfare should expedite the development of better payment systems for medical institutions, as well as improving the allocation of insurance income resources, in order to avoid unnecessary spending on excessive and redundant treatments.
v) Rationalise the medical insurance business by using the DRG (diagnosis-related group) system more broadly and efficiently. This is to ensure similar illnesses use the same level of hospital resources, to avoid incurring high medical expenses.
Similar to Korea, the healthcare system in Hong Kong is also facing the challenges of a rapidly ageing population and rising medical costs. There is an imminent need to ensure its sustainable development in order to provide the public with adequate protection. In 2008, the Hong Kong Government embarked on healthcare reform, putting forward a package of reform proposals through the first stage consultation entitled “Your Health, Your Life”. In 2010, the Government rolled out the second stage consultation on healthcare reform and proposing a voluntary Health Protection Scheme. The Government has promised to draw HK$50 billion (US$ 6.41 Billion) from the fiscal reserve to support healthcare reform after the supplementary healthcare financing arrangements are finalised for implementation. The aim of the proposed scheme in the long run is to offer incentives to encourage people to move away from the public system and to participate in the highly competitive private medical system, thus relieving the long-term demand for public healthcare services.
The population in Hong Kong continues to grow, and is approaching 8 million people. Of this number, it is estimated that about 3.8 million people have access to the low cost Government funded public healthcare system. However, more programs are being developed that will cater to citizens’ needs. One such example is the Voluntary Health protection scheme, which is proposed to provide subsidies to the most at risk patients, such as people who have reached the age of 65 or above, individuals with pre-existing conditions as well as incentives for the younger generations of society by offering limited co-payments for treatments. In other words, on top of the universal healthcare that is already in place, this proposed healthcare reform will be an added financial burden to the Hong Kong Government’s health budget. Given that the Korean’s universal healthcare is running at a deficit, it is important that the Hong Kong Government learn from its neighboring countries in the Asia Pacific region to avoid suffering a similar fate.
Dec
10
New Prenatal Genetic Test Developed
Filed Under Health Insurance, Healthcare, Hong Kong | 5 Comments
Researchers at the Chinese University of Hong Kong announced on Wednesday the discovery of a new form of non-invasive genetic screening for unborn children. This test, which builds on previous research, differs from currently available prenatal screening technologies in that it does not require amniotic fluid samples. Traditional methods of prenatal genetic screening, known as Amniocentesis, have required the womb of the mother to be pierced in order to retrieve genetic samples, which carried a risk to the child.
The new screening method, announced on Wednesday November 9 2010, only requires a blood sample from the mother. This major breakthrough is based on the discovery that foetal genes comprise approximately 10 percent of a mother’s blood plasma, meaning that there is now no need to risk the health of the baby, or induce stress on the mother, by directly piercing the womb.
Once a blood sample has been obtained the researchers use a super computer to analyze the genetic sequence of the child in order to determine if there is any risk of a hereditary disease or congenital birth defect. In a field trial, researchers from the university took a sample from a pregnant woman at the Sha Tin Prince of Wales Hospital and found the results to be exactly the same as if they had sampled the amniotic fluid in the mother’s womb – the child was a thalassemia carrier, but did not suffer from the condition.
Researchers were quick to point out that the test was, for the most part, undeveloped; commercial applications of the screening may be some time away. Due to the nature of the study, and that fact the test was developed for research purposes, the new method of screening currently costs US$ 200,000 per sample. However, according to the lead researcher, Professor Lo Yuk-Ming, the likelihood of a decrease in cost was high; in his view the blood screening method of prenatal genetic testing could cost approximately US$ 2,000 in as little as 5 years time.
Professor Lo Yuk-Ming stated that the drop in cost would be attributable to smarter sampling methods. Currently the researchers test the entire genome of the child which contributes to the high price tag, but by focusing on the genetic predispositions of the population in question the test could be made to focus on a few specific genes where the probability of a genetic risk is high. While the new test can screen for all genetic conditions only 5 to 10 defects would be looked at in the future. For the Hong Kong population the professor cited concerns such as degenerative muscle disease, thalassemia, and Pompe disease as some of the primary concerns to be looked at in future trials.
However, even with the lowered price tag of US$ 2,000 in the future, the new test will still be three times as expensive as the current Amniocentesis method, which currently costs US$ 512 per sample in Hong Kong hospitals. Professor Lo stated that the costs associated with the test, even at their lowered level, would be out of reach for most Public Hospital users in Hong Kong, and that it would take around a decade for the new test to replace current genetic screening methods.
In the view of global medical inflation it is likely that the costs associated with prenatal genetic testing will remain high, but it remains to be seen whether international insurance providers will cover this type of proactive screening as a maternity insurance policy standard. Currently, only a limited number of insurance providers will cover Amniocentesis under their plans, for the most part this coverage is limited to women over 35 where the screening is deemed to be medically necessary (i.e. there is a heightened risk of genetic defects for the child) – this coverage is by no means universal within the industry.
The development of a safer, non invasive, prenatal genetic screening test is only the latest in a number of developments within the field of medical technology. With the news that a daily dose of aspirin can prevent cancer, and the development of a new drug to combat HIV/Aids, medical researchers continue to extend their fight against illness in the 21st century.
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