The Market, Regulatory Challenges and Opportunities for Health Insurance Companies

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The Market, Regulatory Challenges and
Opportunities for Health Insurance Companies
Consumers
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Health Insurance ... a luxury?
Private Health Insurance Profile by Age Band
No developed country has demonstrated that a
public system alone can support health needs
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Health Insurance .. a necessity!
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Private Health Insurance- Market Trends

• Market size of 2.25m members
• March 08 March 09 32,000 members
• Q1 Q2 09 reduction of 23,000 members (lt1)
• Only 3 Health Insurers operating in market
• Hibernian Aviva Health, Quinn Healthcare, Vhi
• VHI market share shrinking
• 14 since 02
• 70,000 customers left VHI in Q1 Q2 09
• Hibernian Aviva Health and Quinn Healthcare
  customer base increasing
• Est. 45k 26k members respectively

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Emerging Consumer Trends in Health Insurance

• Consumers taking back control
• Economizing budgeting carefully
• -Smarter shopping / alternatives (web, brokers
  etc.)

• Return to simpler things
• Family experiences more important

• Value for money
• Loyalty rewards
• Choice Flexibility required

- Seeking safe, stable options
- Consumers are shopping around for better offers
and prices - lower levels of loyalty evident. -
Consumers even more knowledgeable
- Notions of purchasing have changed from
boasting over big purchases to comparing bargains
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Type of Plans
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Plan Cover Hospital Access

• Typical plans in the market
  
  
  - Plans designed for individuals
• Plans designed for companies
• Types of cover available on plans
• Hospital only cover no cover for day-to-day
  medical expenses or benefit covered but subject
  to excess, resulting in very low possibility to
  claim
• - Hospital cover with day-to-day medical expenses

Hospital Cover Individual Plans Example HAH
Level 2 Hospital VHI Plan B Quinn Essential Plus
Company Plans Example HAH Biz Plan VHI
Company Plan Quinn Company Health Plus
Hospital day-to-day Cover Individual Plans
Example HAH Level 2 Everyday VHI Family Plan
Plus Quinn Health Manager Company Plans
Example HAH Business Plan Extra VHI Company
Plan Plus Quinn Company Care
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Access Levels of Cover
High-tech Hospitals -Advanced facilities -Special
Procedures
Private Hospitals -Fast access -Avoid
public waiting lists
Beacon Hospital Blackrock Clinic Mater Private
Premium

• Public Hospitals
  -AE
• Medical emergencies
• Still subject to public waiting lists

St. Vincent's Private Bon Secours Etc
Cover
St. James Mid Western Regional Etc

• Access to type of hospital is determined by
  levels of cover
• - Premium payable determined by the type of
  hospital you require access to
• - Approx 70 of market insured on mid range plans
  i.e. private hospital access

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Challenges in the Health System

• Cost of private bed in public hospital increased
  from 400 in 2004 to 910 in 2009 - 228
• Consultant rates decreased in 2009
• Medical Inflation 8

• Long waiting lists in the public system
• 2010 Budget, further public health cut backs
• Consumers consider PMI as a necessity
• - Price elasticity considerations possibly
  absorb MI

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Health Insurance Regulations

• Hibernian Aviva Health Quinn Healthcare are
  regulated by the Financial Regulator (solvency,
  business practices, CPC).
• Vhi is not regulated by the F.R.
• - All health insurers regulated by FSO DPC
• - Health Insurance Authority - additional
  regulator for health insurers

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Principles of Health Insurance Regulation

• Community Rating
• Not risk rated market
• Everybody pays same premium irrespective of age,
  claims history, health status etc.
• Risk Equalisation
• Government levy
• Age related tax credits

• Open Enrolment
• Cannot refuse to insure anybody
• Must make all products available

• Lifetime cover
• All persons entitled to renew their cover
• Cannot cancel a plan

• Minimum Benefits
• All plans must cover a minimal number of
  procedures
• For example Access to semi-private room in
  Public Hospital, maternity cover

• Health Insurance Levy
• On insurers - 160 per adult 53 per child. Age
  related tax credits paid at source
• 50-59 200 60-69 500 70-79 900 80
  1,175

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Health Insurance Market - Solidarity and
Competition

• Community Rating Solidarity
• Real reform of the industry to introduce fair
  regulation and stimulate real competition in a
  community rated market
• Affordable access to healthcare for all groups
  over 50 Irish population choose access to better
  healthcare with health insurance
• Market Competition
• 15 years since 1985 NO new private facilitates
  were opened
• Protectionist policies remove choice - 20
  increase in cost of health insurance
• More private facilities will help drive down,
  manage cost of medical inflation

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Other Health Insurance Models

• Health insurance reforms in Holland
• Universal health care - price competition
  stimulated between health insurers
• c. 1 in 5 consumers changed health insurers
• Dutch health care system ranked second in 2007
  Euro Health Consumer Index.
• U.S. Model
• U.S.A. is the only wealthy and industrialized
  nation without universal health care.
• c.84.7 of citizens have health insurance i.
  through employer (59.3), ii. purchased
  individually (8.9), or iii. provided by
  government programs (27.8).
• Australia
• Medicare is Australias universal public health
  insurance scheme (established in 1984) -free
  hospitalisation in public hospitals and
  subsidised medical care.
• Medicare is financed by general taxation and levy
  set at 1.5 of taxable income and levy surcharge
  of 1 applicable to high income individuals
  failing to buy PHI Medicare
• Phi continues to be the main pillar of the health
  system (43 PHI ownership)

Critical for all is the creation of real
competition in the insurance and medical facility
sector
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Critical Next Steps
Focus on the delivery of sustained consumer value
and access to the quality of health care desired

• Economic uncertainty combined with rising medical
  technology costs ageing population reduction in
  tax intake
• Current funding of public system not sustainable.
• Urgent need for industry reform in Ireland
• Insurers, Private Facility Operators,
  Consultants, Practitioners, HSE HIA
• Fairer system for all consumers and stakeholders
  in the health insurance market
• Address market dominance and enable real
  competition
• Support the development of new state of the art
  medical facilities
• Ensure affordability of health insurance and thus
  access to quality healthcare facilities

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• Questions ?