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Private Health Insurance

Private health insurance plays different roles in different countries' healthcare systems by complementing, duplicating, or substituting for public coverage. This document analyzes the role of private health insurance across OECD countries using an analytical framework that considers government policies, insurance markets, and the impact on healthcare systems. Key factors like risk selection, adverse selection, competition, and demand influence the performance of private health insurance markets and their effects on equity, costs, and other healthcare system goals. The experiences of different countries demonstrate both challenges in regulating private health insurance and opportunities to address issues through various policy approaches.

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Ahmed Gouda
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99 views16 pages

Private Health Insurance

Private health insurance plays different roles in different countries' healthcare systems by complementing, duplicating, or substituting for public coverage. This document analyzes the role of private health insurance across OECD countries using an analytical framework that considers government policies, insurance markets, and the impact on healthcare systems. Key factors like risk selection, adverse selection, competition, and demand influence the performance of private health insurance markets and their effects on equity, costs, and other healthcare system goals. The experiences of different countries demonstrate both challenges in regulating private health insurance and opportunities to address issues through various policy approaches.

Uploaded by

Ahmed Gouda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Private Health Insurance

in OECD Countries
Francesca Colombo & Nicole Tapay
http://www.oecd.org/health
click on OECD Health Project, then on Private Health Insurance
1

Purpose of the Study


Q

Assess the role of PHI as it complements and


interacts with public health insurance schemes
Analyse PHI roles:
Explain variation in market size and population
coverage.
Analyse performance: i) of the PHI market; ii) the
impact of PHI on the health system
Identify factors underpinning performance
Identify useful policies & regulatory practices
2

What is Private Health Insurance?


INSURANCE: prepayment and pooling
on the basis of the main source of financing, we
distinguish:
Public HI
(predominantly financed
through the tax system)

Q
Q
Q

Private HI
(predominantly financed
through private premiums)

BUT: Borderline cases:


Mandatory, flat, non income-related, premiums (e.g, CH)
Highly subsidised purchase of cover (e.g., CMU - France)
Schemes for government employees
3

Heterogeneity of public/private mixes


of funding health
PHI share Population Main PHI
of THE
covered
Function
USA
34.8%
72.4%
Primary

France

12.8%

85%

Compl.

Canada

11.2%

70%

Suppl.

Australia 7.1%

44.9%

Duplic.

UK

10%

Duplic.

3.3%

Source: OECD Health Data, PHI Statistical questionnaire and other sources, late 1990s.
Data are preliminary. Do not quote.
4

PHIs role depends on structure of


public insurance systems
Eligibility to public HI

YES
Same services
covered by
public health
insurance

NO

Duplicate Substitute
(UK, EIRE, /principal

Aus, Sp, Ita)


(USA, Ger,
Health
NL, CH)
services
Complementary
covered Co-payments on
publicly insured
(Fr, B, USA)
by PHI services

Additional/extra
services

Supplementary
(CH, NL, Ger, Can)
5

Analytical Framework
Government activity
Government
Oversight of
Insurance
and Financial
Markets/
Competition

Insurance and
Financial Markets
PHI Market
(structure, operation,
performance)

IMPACT on
HEALTH SYSTEM:
Equity

Government
Fiscal &
Tax policy

Government
Policy
towards PHI

Public Programme of
Insurance Coverage

Costs/Efficiency
Innovation/Flexibility
Public Satisfaction

Government Social Policy


&
Government Policy towards
the Health System

Consumers

Public Providers

Purchasers

Private Providers

Impact on competition

Some key variables within the


analytical framework...
PHI market

Gov. policy towards PHI

Demand: Buyers characteristics, reasons for buying


phi, income and price elasticity
Supply: Insurers, market concentration, benefit
packages, premiums, claims, links with providers.

Regulation, tax incentives, structure and


levels of coverage of public systems

Impact on health system


Equity:
- Financing equity of the mix; equity of access.

Cost/efficiency:
- Impact on overall utilisation and prices; net cost
of subsidies to PHI;

Responsiveness
Public satisfaction, choice, impact on waiting,
perceptions of quality of care

Performance of the PHI market


Equity:
- Risk selection, premium rating, comprehensiveness of
cover, portability, market segmentation

Cost/efficiency:
- Insurers cost containment, premium inflation;
administrative efficiency
Innovation, flexibility of products/practices

Competition: Transparency of information,


adverse selection, for profit versus not-for profit
7

Method
Q

Review of secondary sources


- Comprehensive only for few countries only
- Lack of policy documents in countries with limited PHI
- Few comparative studies.
- Limited data on market performance.

Q
Q

Network of OECD government experts on PHI


5 case studies (Ireland, Netherlands, Australia,
France and USA)
- countries with relevant policy experience and markets

Primary data
Statistical and Regulatory questionnaires
8

Statistical questionnaire
Q

Data on premiums & claims, disaggregated by:


Individual/group policies
PHI role (duplicate, substitute, complement,
supplement)
Medical care (hospital, ambulatory, medical goods)

Data on the PHI market


Concentration, population share, administrative costs.

Problems/Data gaps:
Incompleteness of some responses, particularly in
countries with limited PHI role:
No time series
9

Government Intervention & Regulation


Significant variation by country
Includes some aspects of general insurance Regulations
Targets PHI market specific issues & market failures
Targets issues relating to the interaction with public coverage
Responds to market experiences with previous regulations

Targets problems

Government
policy
and regulation

Experience with regulations


Some resolution of challenges
Remaining challenges
New responses to regulations

10

Government
Assessment

Regulatory Questionnaire
Q
Q

Q
Q
Q
Q

Scope of regulation/regulatory structure


Regulations to promote equity, access and
risk-pooling
Disclosure requirements
Benefit-related requirements
Government incentives re: purchase of PHI
Public/Private mix of provider/service
financing
Current challenges
11

Duplicate Coverage
Q

Q
Q

Q
Q
Q
Q

Complex interaction between parallel public and


private financing systems
Access to care can be skewed by insurance status
Demand for PHI related to waiting, but impact of
PHI on waiting more difficult to verify
PHI offers more choice for those buying it
Extent of cost shifting from public to private sector?
Debate over use of tax money if PHI is subsidised
Does parallel public and private financing systems
make markets more contestable?
12

Complementary Coverage
Q

Q
Q

Most OECD countries have co-payments on public


systems.
Some countries prohibits PHI coverage of co-pays.
Few countries have a large complementary phi
market.
Can PHI reduce inequity in access due to large copays?
Impact on coverage of co-payments on utilisation
and moral hazard
13

Primary Coverage
Q
Q
Q

Q
Q
Q
Q
Q
Q

Access to coverage and health services


Cost and efficiency Issues
Consumer choice of benefits. Evidence of risk
selection and adverse selection
Boundary Issues
Impact of regulatory interventions
Combining private/public market
Group vs. Individual markets
Employer and individual self-funding
Different utilisation patterns of public and
private health insurance?
14

Supplementary Coverage
Q

Pros and cons of Out -of - Pocket vs. Insuring


for certain benefits
To what extent does supplementary coverage
interact with public coverage system?
Comparative experience when coverage is
packaged with primary social insurance

15

Some cross - cutting issues...


Q

Risk Selection and Adverse Selection:


Implications for equity/access and for cost/efficiency

Competition Issues:
Market structures, For-Profit vs. Not-for-Profit Carriers:
Information Asymmetry

Factors Behind Demand for PHI Coverage

Complexity of designing the right regulatory


framework and financial incentives
Q Can lessons be exported or is each case
unique?
Q

16

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