Private Medical Insurance
UK vs Republic of Ireland
Sue Cross
Aongus Loughlin
George Orros
AXA PPP healthcare
Mercer HR Consulting
Universal Health Consultants
UK
Ireland
Moderator UK vs Ireland
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
Category I
Category II
In-patient treatment
All covered
Accident &
Emergency
Primary care
Drugs
All covered
Co-payment of €40
per day/max €400 p.a.
€40 payment if not
referred by GP
Full fee for service
Up to €70 per month
paid by individual &
remainder paid by
State
All covered
All covered
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 @ 20% currently
Market heavily regulated
• Community Rating
• Open enrolment
• Lifetime Cover
• Minimum benefits
• Risk Equalisation
Ireland - Community Rating vs
Risk Rating
450%
400%
Community Rate
350%
Risk Rate = Actual Cost
300%
250%
200%
150%
100%
50%
0%
25
35
45
55
Age
Source: Dept of Health & Children
65
75
85
Ireland -Typical PMI Cover
In-Patient/Day care treatment
Full cover (Max 180 days per year) No
exclusion of chronic conditions
Out-Patient specialist
consultations/investigations
Limited cover (subject to per item limits & large
Primary Care
Limited cover (subject to per item limits & large
aggregate annual excess)
aggregate annual excess)
Drugs (Out-Patient)
No cover
• Cost of most popular PMI coverage in Ireland
Adult = €583
Child = €212
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
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
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
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
UK - PMI
• Typical cover
Treatments
Cover
Exclusions
In patient/ day case
Full refund
Chronic
(includes drugs)
conditions and A&E
Out patient
Cover varies
Annual benefit limit
Primary care
Not covered
Outpatient drugs
Not covered
• Product variants: Annual excess, NCD, waiting list plans
• Average annual premium per subscriber( Laing & Buisson 2002)
Total:
£773
Individual:
£1,161
Company paid:
£586
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
UK - Critical issues
•
•
•
•
•
Grow the individual market
Medical expense inflation
Take advantage of public policy decisions
Affordability
Product innovation
UK vs Ireland
Numbers insured
8,000,000
7,000,000
UK Subscribers ( Laing
& Buisson 2003)
5,000,000
UK People covered (
Laing & Buisson 2003)
4,000,000
3,000,000
Ireland -People covered
(HIA annual report
2002)
2,000,000
1,000,000
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Numbers
6,000,000
Ireland PMI
Number insured vs population
Growth of PMI in Ireland since 1990
4,500,000
4,000,000
Numbers
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
Years
Number Insured
Population : April
Source: White Paper Private Health Insurance 1999, HIA Annual Report 2002 & independently sourced
information from CSO, VHI, BUPA and a number of Restricted Undertakings.
1999
2000
2001
2002
2003
UK - PMI Subscribers
Corporate vs Individual
4,000,000
3,500,000
No of subscribers
3,000,000
2,500,000
Total PMI (ABI)
2,000,000
Personal PMI (ABI)
1,500,000
Corporate PMI (ABI)
1,000,000
500,000
1996
1997
1998
1999
2000
2001
OECD Health Data
– UK vs Ireland
OECD Health Data
1970
1980
1985
1990
1995
1996
1997
1998
1999
2000
Total health expenditure - % GDP
Republic of Ireland
3.6
5.1
United Kingdom
3.9
4.5
8.4
5.6
7.6
5.9
6.6
6.0
7.2
7.0
7.0
7.0
6.9
6.8
6.8
6.8
6.8
7.1
6.7
7.3
Public health expenditure - % GDP
Republic of Ireland
2.8
4.2
United Kingdom
3.3
3.9
6.8
5.0
5.8
5.0
4.8
5.0
5.3
5.8
5.1
5.8
5.3
5.4
5.2
5.5
5.2
5.7
5.1
5.9
Private health expenditure - % GDP
Republic of Ireland
0.8
0.9
United Kingdom
0.6
0.6
1.6
0.6
1.8
0.9
1.8
1.0
1.9
1.2
1.9
1.2
1.6
1.4
1.6
1.3
1.6
1.4
1.6
1.4
19%
11%
24%
15%
27%
17%
26%
17%
27%
17%
23%
21%
24%
19%
24%
20%
24%
19%
Private as % of Total
Republic of Ireland
United Kingdom
1960
22%
15%
18%
13%
Why purchase PMI
•
•
•
•
Choice (specialist/hospital)
Comfort ( private room)
Convenience (time of treatment)
Access ( speed of treatment)
In-patient waiting lists:
UK :
1,000,000 approx (2% of population)
Ireland :
18,500 approx (0.45% of population)
Key Similarities
• Aims of PMI
• Secondary care provided by public
health system
• High medical expense inflation
• Public policy decisions
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
What can be learnt?
• For UK
(political context is key)
• For Ireland
(political context is key)