The role of Cadenza Project in response to these findings

1
HEALTH INSURANCE FOR OLDER POPULATION
2
Objectives

• What can we learn from the previous health
  finance reform experience?
• What are the major concerns of older health
  insured?
• Health care insurance will alter the
  relationship between providers and patients, how?

3
Health Finance Reforms Hong Kong (1993 2008)
4
Healthcare Finance Reforms in HK(1993 2008)
5
Media Responses towards Health Finance
Options(March 13 June 18, 2008)
of responses
6
What are HK people concerned about?
Mean
6.7
6.6
Benchmark Personal Finance in Asia, Sept 2008,
p65
7
Are People Willing to Cost Sharing?

• Yes, thus
• 38.5 had medical insurance provided by
  employers. (HK Government Survey, 2006)
• 65 owned at least one health, medical or
  hospitalization insurance plan 43 of these
  people with critical illness coverage. (AXA
  Protection Survey, 2007)
• 20 owned both employer and personal medical
  insurance. (AXA Protection Survey, 2007)

8
Why Futile?

• Lower income had problems to make ends meet, any
  increase in contribution, will further reduce
  their take home pay.
• Middle and high income had already made a major
  tax contribution, they do not want to make any
  increase in contribution without any promise of
  getting better service or more choice in return.

Development and Financing of HKs Future Health
Care by The Bauhinia Foundation Research
Centre, Health Care Study Group, 2007
9
Desired Features of a Health Care Product
Hospital care, primary prevention care, long
term care
Allow people to change insurer/providers without
penalty, and/ or seek medical care in Mainland
China
Portability
Comprehen siveness

• Regulator
• Provider
• Insurer

Government Role
Universality
Accessibility
Obtain the service at the right time and at the
right location
No one will be denied medical care because of
age, pre-existing health conditions means)
10
Comprehensiveness, UniversalityPortability and
Accessibility of Public Health
InsuranceCanadas Experience
11
The Canada Health Act (1984)

• Aim To protect, promote and restore the physical
  and mental well being of residents of Canada and
  to facilitate reasonable access to health
  Services without financial or other barriers.
  (Section 3)
• Five Principles
• Public Administration
• Comprehensiveness
• Universality
• Portability
• Accessibility

12
Test of Comprehensiveness

• Originally, comprehensive coverage of all
  hospital services
• Today, medically necessary (and non experiment)
  service.
• Political debate, government commitment, all
  encompassing care and right to health
  insurance, but not right to health care.

13
At least, we need to know

• What will the health plan coverage?
• Will it be universal and accessible regardless of
  age and pre-conditions?
• Will the health insurance plan portable?
• Before we make a fiscal commitment.

14
Health Insurance forOlder Person
15
Nature of Insurance and Health Insurance

• To balance individual random risk with a large
  number of insured population.
• Health insurance
• Medical events may be unpredictable, but the
  overall risk is predictable
• Covering random, infrequent and costly health
  problems beyond ones control
• Ensures availability of money for unexpected
  medical expenses

16
Insurance Companys Strategies in reducing their
risks

• Medical underwriting to screen out applicants
  who are too risky to be accepted. Risk selection
• Dont insure pre-existing conditions e.g., mental
  health, congenital illnesses
• Drop those who get major illness e.g., heart
  disease
• Charge them with a higher premium
• Premium increases significantly with age and
  people with pre-existing conditions
• Greatly increase co-payment

17
Very Difficult for Older Persons to be insured
The Older Risky Population

• 65 years made up 14 of BC population
• 47 acute care services
• 49 of PharmaCare expenditure
• 71 of home and community care
• 93 of residential care services
• Compare to 70 years old persons, a typical 85
  years old persons use
• 3 times more acute care services
• 12 times more community services
• 25 times more residential care services

Ministry of Health 2006/07 Annual Service Plan
Report, BC, Canada
18
Catastrophic Events are Rare but Expensive Out
of Pocket Health Care Expenditure in USA
5
95
Average Expense (US)
42
49,285
3,588
58
52
33,607
48
1,658
Centers for Medicare and Medicaid Services (CMS)
national health care expenditure University of
Michigan 2002 Health and Retirement Survey,
McKinsey analysis.
19
People Feel Prepared in USA
48
65
of respondents with an option of choosing an
insurance
28
49
22
48
20
20
15
The McKinsey Quarterly, June, 2008
20
Routine Adequate Coverage?Projected 2014
out-of-pocket health care expenses by US retirees
by service category (Nov 2005, McKinsey on Health)
(hospice, professional services)
21
Catastrophic Adequate Coverage?Projected 2014
out-of-pocket health care expenses by US retirees
by service category (Nov 2005, McKinsey on Health)
(hospice, professional services)
22
Sufficient Amount?

• You buy at age 20, the benefit you accumulate
  will at age 65 HK300,000
• 2 employee and 2 employer contribution
• 300,000 10 days stay in a private hospital
  with medical care and (10,000 per day) 12
  months stay in a decent private nursing home
  (15,000 per month).

Benchmark Personal Finance in Asia, Sept 2008,
p60
23
Long Term Care Insurancethe Japans Case
24
Health Care Insurance in Japan

• NHI (National Health Insurance by all levels of
  government) covers self employed and elderly
  36.
• EHI (Employees Health Insurance) 56
• GMHI (Government-Managed Health Insurance by
  Ministry of Health, Labor Welfare) covers small
  and medium size companies employees 30
• SMHI (Society-Managed Health Insurance) covers
  large companies employees 26
• Civil Servant and Teachers 8

25
Long Term Care Insurance in Japan - 2000

• Welfare service program Health service system
  for the Elderly
• 2000, Long Term Care Insurance at home and
  institution services
• Type 1 (65)
• Type 2 (40 64)
• for people with 15 specific diseases
  (dementia etc.)
• Financed by taxes (51), LTCI contribution (37)
  and copayment (12)

Long Term Care Certification required
1 of pension from elderly pension 1 of
health insurance from younger population
26
Public Social Health Insurance Actand
Exceptional Medical Expenses Act the
Netherlands Case
27
The Health Insurance Act

• Regardless the age or health status of a
  resident, a private insurer
• cannot refuse to cover him/her for the basic
  insurance plan
• has to charge everyone joining the basic plan the
  same rate of premium (approx. 1,050 euro per
  year)
• Residents can switch to another private insurer
  after a year
• Citizens under 18 pay no premium

28
Exceptional Medical Expenses Act

• Paid through Tax.
• Rate is income related (13.45 in 2005).
• Eligibility is determined by CIZ.
• Benefit can be in kind or in cash.
• Copayment is mostly required.
• Benefits cover home care, residential care homes,
  nursing homes, hospital and rehabilitation
  (normally after the stay paid by HIA 365 days).

29
Financing of HIA
Health Insurance Board
Pay insurers for childrens premiums and to
compensate for financial disadvantage in insuring
high risk individuals
Excessive health expenses
Source The new care system in the Netherlands,
Ministry of Health, Welfare and Sport, the
Netherlands
30
Beyond Health Insurance
31
Healthcare Relationship Map
Ultimate Source of Funds
Original Source of Funds
Private Providers
Consumers Patients/ Clients
Employers
3rd Party Payers
Public Providers (HA, DH, SWD)
Taxpayers
32
Health Care Insurance is a Complex Business
Preventive care Basic care Treatment of serious
condition
Disease, illnesses Major medical event
Accident Mental illness
Outpatient care Inpatient care

• Disability
• Impairment

Risks
Costs
Pharmaceuticals Institutional care
End-of-life care
Bundling Approach
Financing mechanisms
Savings Investments Insurance
Managed care
Longevity Insurance Reverse Mortgage
Advice
33
Managed Health Care
Ever expanding and innovation driven nature of
modern health care, is like a powerful engine
with no brake.

• Supply and Demand
• Discharge planning length of stay
• Case management
• Utilization review
• Disease management
• Medical innovation, technology evaluation
• Assessment of provider

34
Health Care Advicefrom Health Insurance Providers

• Health related finance advice
• if they have adequate coverage
• how much they have to pay and what
• the plan will cover
• Support in navigating the complex heath care
  system especially after a major illness
• Support and guidance in dealing with chronic
  conditions
• Preventive health advice
• Treatment advice

35
Conclusions

• We need to know the features of health care
  products comprehensive, accessible, universal
  and portable, before we choose a or multiple
  health care finance options.
• Health insurers will not find the older insured
  profitable, government funding support to
  health care finance for older persons (e.g., long
  term care insurance) appears to be the only
  alternative.
• Health care insurance (as 3rd party payer) will
  ultimately alter the relationship between health
  care providers and receivers. We need to be aware
  of the unintended consequences of such changes
  e.g., managed care