Private Medical Insurance UK vs Republic of Ireland

1
Private Medical InsuranceUK vs Republic of
Ireland

• Sue Cross AXA PPP healthcare UK
• Aongus Loughlin Mercer HR Consulting Ireland
• George Orros Universal Health Consultants
  Moderator UK vs Ireland

2
Irish Healthcare System

• System provides free access to all citizens based
  on ability to pay according to income.
• Category I (Means tested income limit ranges
  from 6,396-11,648. All persons over 70 eligible
  irrespective of income. Approx. 34 of
  population)
• Category II (remainder of population).
• Funded from general taxation

3
Ireland Key features of PMI

• Voluntary private insurance
• Policyholder retains right to use public system
• No reduction in tax/social insurance
  contributions
• State provides tax relief on full premium _at_ 20
  currently
• Market heavily regulated
• Community Rating
• Open enrolment
• Lifetime Cover
• Minimum benefits
• Risk Equalisation

4
Ireland - Community Rating vs Risk Rating
Source Dept of Health Children
5
Ireland -Typical PMI Cover

• Cost of most popular PMI coverage in
  IrelandAdult 583Child 212

6
Ireland - Regulatory framework

• Voluntary Health insurance Act, 1957
• Health Insurance Act, 1994 (Community rating,
  Open enrolment Lifetime cover)
• Health Insurance (Amendment) Act, 2001
• Health Insurance Authority established February
  2001 to determine whether risk equalisation is
  necessary and oversee PMI system in Ireland
• Risk Equalisation Scheme introduced 1st July 2003
• Introduction of lifetime or age adjusted
  community rating insurers can charge additional
  premium loadings to those joining at age 35 or
  over

7
Ireland - Critical issues

• Potential introduction of risk equalisation
  currently being considered. Two opposing sides
  and opinions!
• Intent to move towards charging full economic
  cost for private beds in public hospitals
• Government intent to reduce waiting lists and
  National Treatment Purchase Fund.
• Market demand for primary care/out-patient cover
• Growing demand for Healthcare Cash
  Plans

8
UK - Public health system

• National health service (NHS)is funded from
  general taxation
• Provides in patient, out patient and primary care
  free of charge
• Co-payment on primary care prescriptions

9
UK - Key features of PMI

• Indemnity based product
• Private medical treatment for acute conditions
• Predominantly excludes pre-existing conditions
• Voluntary private insurance - retain right to
  full use of public system
• No tax incentive for Individuals to purchase PMI

10
UK - PMI

• Typical coverTreatments Cover ExclusionsIn
  patient/ day case Full refund Chronic
  (includes drugs) conditions and AEOut
  patient Cover varies Annual benefit
  limitPrimary care Not covered Outpatient
  drugs Not covered
• Product variants Annual excess, NCD, waiting
  list plans
• Average annual premium per subscriber( Laing
  Buisson 2002)Total 773Individual 1,161Com
  pany paid 586

11
UK - Government impact on PMI

• Free market - little regulation currently
• No personal income tax relief
• Insurance premium tax (IPT) - 5 of premium
• Company paid premiums are taxed as a benefit in
  kind
• Companies can offset the cost of PMI for tax
  purposes but cost is subject to employer N.I.
  charge

12
UK - Critical issues

• Grow the individual market
• Medical expense inflation
• Take advantage of public policy decisions
• Affordability
• Product innovation

13
UK vs IrelandNumbers insured
14
Ireland PMINumber insured vs population
Source White Paper Private Health Insurance
1999, HIA Annual Report 2002 independently
sourced information from CSO, VHI, BUPA and a
number of Restricted Undertakings.
15
UK - PMI SubscribersCorporate vs Individual
16
OECD Health Data UK vs Ireland
17
Why purchase PMI

• Choice (specialist/hospital)
• Comfort ( private room)
• Convenience (time of treatment)
• Access ( speed of treatment)In-patient waiting
  listsUK 1,000,000 approx (2 of
  population)Ireland 18,500 approx (0.45 of
  population)

18
Key Similarities

• Aims of PMI
• Secondary care provided by public health system
• High medical expense inflation
• Public policy decisions

19
Key differences

• Significant political support in Ireland
• Regulation Product pricing and design restricted
  in Ireland( community rating, open enrolment,
  lifetime cover, minimum benefits)Risk
  equalisation in Ireland
• Tax incentives
• Primary care provision
• Market growth
• Affordability
• Product exclusions

20
What can be learnt?

• For UK
• (political context is key)
• For Ireland
• (political context is key)