Kiatnakin Phatra Bank Public Company LimitedKKP
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Kiatnakin Phatra Bank Public Company LimitedKKPS says Thai healthcare spending is outpacing GDP, risking fiscal strain after 2030
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Thailand's public health system is entering a critical turning point, with healthcare spending rising faster than economic growth. Theerapol Udomves, an analyst at Kiatnakin Phatra Securities, or KKPS, said that if the expenditure structure continues on its current path, fiscal constraints will become clear after 2030 and could lead to changes in how the budget is managed. From 2000 to 2023, Thailand's healthcare spending grew by an average of 7.6% per year, while nominal gross domestic product, or GDP, grew by an average of 5.8% per year, pushing the ratio of healthcare spending to GDP up from 3.08% to 4.54%. The National Institute of Development Administration, or NIDA, estimates that healthcare spending from 2023 to 2032 could grow by an average of 4-5%, while the Thailand Development Research Institute, or TDRI, estimates 6-7% per year. The public sector remains the main bearer of the burden, funding 78% of all healthcare spending and consistently accounting for more than 70%. Currently, 99.6% of Thailand's population has access to medical treatment under at least one health system. The universal coverage scheme covers 47.5 million people, with a 2026 budget of about 265 billion baht, or 5,585 baht per person per year. The social security scheme covers about 12 million people, with a medical benefits budget of 75,000-80,000 million baht, or 6,300-6,700 baht per person per year. Civil servant medical benefits cover 5 million people, with costs of 95,000-100,000 million baht, or 19,000-20,000 baht per person per year. Meanwhile, welfare spending rose from 20% of the total budget in 2016 to 30% in 2026, and the budgets of the universal coverage scheme and civil servant medical benefits grew by an average of 5% per year from 2017 to 2026, higher than the average increase of just 2.6% per year in the state budget. Under assumptions of nominal GDP growth of 2.3-3.1% per year, a government deficit of 3% of GDP, welfare spending growth of 6% per year, and personnel spending growth of 4% per year, budget constraints may begin to become clear from around 2030 or earlier. If welfare spending is allowed to expand along its existing trend, the investment budget will be squeezed further. But if the investment budget ratio must be maintained at 20%, welfare spending in 2035 may need to be about 25% below the forecast level, and by 2040 it may need to be about 34% below projections. The social security system faces the same challenge: from 2014 to 2024, contribution revenue grew by an average of 3% per year, while benefit spending rose by an average of 9% per year. As for solutions, Theerapol said there is no need to start by cutting medical benefits or shifting the burden onto the public, but efficiency can first be improved from within the system, including reducing drug costs, reforming payment systems for healthcare providers, cutting unnecessary services or procedures, promoting primary care, and using digital technology to lower administrative costs. Copayment is another approach that has been mentioned if the public sector cannot bear all of the additional costs. Voluntary health insurance still has plenty of room to grow. Data from the National Statistical Office for 2023 shows that about 6.4% of Thailand's population has voluntary private health insurance, and money from voluntary health insurance accounts for only 4% of all healthcare spending. Currently, the public sector bears about 450,000-500,000 million baht in healthcare costs. If some of the burden is transferred away from the public sector in the future, it is estimated that more than 100,000 million baht in additional healthcare costs could flow to the private sector. That figure is an assessment of possibilities under assumptions, not a budget the government has announced it will transfer directly to private hospitals. Theerapol also said the picture should not be interpreted as the state preparing to withdraw from the public health system, or that universal coverage will disappear. Therefore, the turning point for Thai public health may not mean a shift from the state to the private sector, but a shift from a system in which the state bears most of the burden to a structure in which multiple funding sources play a greater joint role.