Private Health Insurance for UHC
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Transcript of Private Health Insurance for UHC
7/21/2019 Private Health Insurance for UHC
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PRIVATE HEALTH INSURANCE FOR UHC
AZUSA SATO
LONDON SCHOOL OF ECONOMICS / ASIAN DEVELOPMENT BANK
26 JANUARY, 2016
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Content
• Overview
• Trends
• Potential advantages
• Potential disadvantages
• Mitigating information failures
• Performance of PHI
• PHI experience around the world
• Alternative roles for PHI
• Conclusion
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PHI: Overview (1)
Definition
Insurance schemes financed through private health premia . Take
up of private health insurance is often, but not always, voluntary
(it may also be compulsory for employees as part of their working
condition)
Premium setting
Premia are non income-related, although the purchase of PHI can
be subsidised by the government through tax credits or relief,
vouchers or cash benefits (Austria, Ireland, Portugal)
PoolingThe pool of financing is not channelled nor administered through
the government , even when the insurer is government-owned
Risk rating
Commonly, based on probability of an individual making a claim
Group-rated – purchased through an employer (average risk of
employees in the firm)
Community-rated – based on average risk of population in a
geographically defined area
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PHI: Overview (2)
Premium
collection
Can be independent private bodies, or private not for profit
companies and funds (Belgium, Denmark, Finland, France, Germany,
Ireland, Italy, Lux, Netherlands, Spain, Switz, UK)
Classifications
• Primary – PHI only available coverage because there is no
government coverage or individuals are ineligible. OR:
individuals are entitled but have opted out (substituted)
• Duplicate – coverage for services already included under
government insurance, while also offering access to different
providers or levels of service . Does not exempt individuals from
contributing to government programs
• Supplementary – coverage for additional services not coveredby government
• Complementary – covers all or part of the residual costs not
otherwise reimbursed by government (eg cost sharing, co-
payments)
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Trends in PHI (1)
Evolution to PHI, 2005-2013
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Trends in PHI (2)
PHI coverage, by type, 2015
PHI can be both duplicate
and supplementary
(Australia);
complementary andsupplementary (Denmark
and Korea); duplicate,
complementary and
supplementary (Israel
and Slovenia)
Source: OECD 2015
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Potential advantages of PHI
Rich can self finance • Gvt can target limited resources for the poor
Additional resources • For infrastructure to benefit all
Innovation andefficiency
• May be encouraged, catalyzing public sector reform
Choice • For consumers who are able to afford it
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Potential disadvantages of PHI
Information failure
• In benefits package – PHI relies on competition – if
people are not able to compare benefits across
different plans, they do not have perfect information
•
Insurers may also exclude certain conditions fromcoverage which shifts costs of care to the public
system
• In premia setting – PHI is expensive and the poor are
unlikely to be able to pay, while high risk persons have
to pay high premia
– In South Afr ica and Chile, reti rees ‘drop out’ of
the private sector market
segmentation/exclusion breaches equity
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Mitigating information failures
• Prevent insurers fromdifferentiating premia accordingto risk
• Mandatory inclusion of all risks
and conditions
Premium
• Regulate benefits provided
• In UK, the Office of Fair Tradingrecommends insurers create acore term (basic) benefits packageto guarantee a minimum package
Product R e
g u l a t i o n
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Performance of PHI
• PHI performance varies according to country or regional situation and
institutional capacity
• Generally, PHI has been disappointing for many countries: health costs
have not decreased, quality of care has not improved and coverage rates
have not increased
• Deteriorations in equitable access, originating from a regulatory
framework insufficient to effectively integrate PHI into existing structures
• In developing countries, PHI is merely an alternative for the development
of more efficient and universal insurance mechanisms
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PHI experience around the world
Weak and
delayed
regulation
PHI (including CBHI) is generally designed as supplementary, covering
better-quality treatment that only the rich can afford, or alternatively offer
low coverage
Failure to provide proper risk-sharing and risk-adjustment mechanisms and
lack of PHI knowledge by the public
Growth expected
in stronger
economies withhigh private health
expenditure
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Alternative roles for PHI (1)
Government sponsored premium payment to private insurers
• India
• Moving away from state-financed health care system and has arelatively large PHI market
• A trust fund (collected through earmarked tax on liquor sales) is used
to (partially or wholly) pay premia of the poor to private insurancecompanies
• Households can then access public or private facilities
• Colombia
• Mandatory health insurance and everyone is required to contributepremia
• Insurers operate with an insurance premium known as CapitationPayment Unit (block amount of money transferred by thegovernment for each individual enrolled)
• Government subsidises those who cannot afford premia
• Coverage can be from both public and private health plans
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Alternative roles for PHI (2)
Private sector equity/PPP – Abu Dhabi
• ‘Daman’ system had low capacity and large
inefficiencies on provider side, inadequate
regulatory framework and transparency
regarding cost and quality
• PPP model employed: private health
insurance company Munich RE owns a 20%
share of equity and Daman maintains 80%
• Encourages transparency in health
financing and greater involvement ofprivate sector
• May increase productivity of healthcare
providers
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Conclusion
• PHI is an alternative way to finance health care and can expand options
• PHI has several advantages, including innovation, additional resources
and providing choice
• PHI also has serious disadvantages stemming from information failures
• PHI without adequate regulation fails to meet society’s policy
objectives
•
Even with heavy regulation (which is politically and technically difficultto implement), is not an efficient or equitable way to fund health care
• Role of PHI varies significantly according to country situation and
institutional capacity, but creative ideas should be sought
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• World Bank (2007) Private voluntary health insurance in development: friend or foe?
• OECD (2015) Health at a Glance 2015 OECD Indicators
• Mossialos et al (2002) Funding health care: options for Europe
• OECD statistics online (accessed 2016)
• Brunner et al (2012) Private Voluntary Health Insurance: ConsumerProtection and Prudential Regulation
Key References
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THANK YOU!