Private Health Insurance – New Healthcare Landscape in
Ireland
Ian Addie – Vhi Healthcare
Ian Addie 2014
Strictly Confidential
Key Challenge – Affordability and Demographics
The number of over 65s in Ireland will increase by 85% over the next 20 years
Changes in 65+ year old for last 20 years compared to next 20 years
Numbers
% increase
Numbers
1991
403,000
8%
2011
535,000
2002
436,000
8%
2021
732,000
37%
2011
535,000
23%
2031
991,000
35%
Increase
132,000
33%
Increase
456,000
85%
% increase
• Ireland has had relatively limited increase in 65+ year olds for the last 20 years
• Ireland will have significant ageing for the next 20 years. Projected to be fastest in Europe
• Percentage increases will be even greater among higher age bands e.g. 85+ year olds
• Projected increase of c 40% in the incidence of chronic diseases between 2007 and 2020.
Private Health Insurance Market
in Ireland
 45% of population have private health insurance v’s 51% in 2008
 Market is declining – 11% in 5 years. (2.3M 2008 vs 2.04m 2013)
 Reduction in take up at younger ages – big concern for
sustainability of market.
 Significant ageing of the customer profile
 Affordability is the greatest challenge facing the PMI Market
Core Principles
Community
Rating
No Risk
Selection
Same price for
all,
same product
Sick and
vulnerable have
the same access
Risk Sharing
To protect the
sick
Key objective of all the rules is that there should be NO incentive to compete on Risk Selection
3
Market Share at end 2013
Health Insurers
4%
15%
Aviva Health
23%
54%
Laya Healthcare
Glo Health
4%
Vhi Healthcare
Restricted m'ship
Vhi Healthcare has a 54% market share but pays approximately 65% of the claims
4
PMI Market Key Challenge - Demographics
• Healthcare costs widely differ between ages and between healthy and sick
• The average healthcare cost for a 70-79 year old is 10 times that of a 30-39
year old
• We need to attract more younger people into the market
5
Government Policy: Lifetime Community Rating
1st May 2015 – Introduction of LCR
• Designed to attract younger people into the market
• Under LCR, community Rating will be modified to reflect the age at which a
person takes out private health insurance.
• Late entry loadings are applied to the premiums of those who join the health
insurance market at age 35 or over – 2% p.a. for every year you are aged over
34
• If you take out private health insurance earlier in life, and retain it, you will
pay lower premiums compared to someone who joins when they are older
• Spreads the costs of older and less healthy people across the market, helping
to support affordable premium levels for all.
6
Government Policy – Universal Health Insurance
Universal Health Insurance (UHI)
• Timing of introduction is uncertain
• Single tier health service supported by universal health insurance
• Challenges and opportunities for insurers – 45% Coverage to 100% coverage
• Vhi – 50+ years of experience in health Insurance, systems, medical
knowledge, contracting, large scale claims payments.
• Committed to working with Government
• Challenge is to have as an efficient and affordable system as possible in place
before then
7
Where do we go from here?
•
Steadily contracting market
•
Rapidly Ageing Population
•
•
Affordability challenge
The challenge for private insurers internationally is how can we secure better patient
outcomes at lower cost?
•
Clinical Outcomes & Quality of Life Outcomes
“Need to move from provider-led organisation of care to patient led system of care….”
KPMG 2014
8
The new healthcare landscape: New Focus for Insurers
Insurer
NewFocus
focus for Insurers
• Current Model: Typically focus on reducing
provider prices and managing risk
•
Future Model: Focus on improving the value of
care produced - outcomes
•
High quality care – more effective, safer and
patient centred – is usually less expensive care
•
By preventing disease and the complications
that accompany chronic illness or unnecessary
and avoidable care we can improve outcomes for
patients and reduce costs
•
Earlier Intervention – don’t wait for conditions
to become acute – prevent conditions from
becoming acute in the first place
The new healthcare landscape: New model of healthcare delivery & reimbursement
Integrated Healthcare
Reimbursement Reform
•
•
Reimbursement reform is key
•
Most current payment systems work
directly against the delivery of integrated
care
•
Paying for individual activities & other
inputs actually stimulates high volumes in
these areas
•
Reimbursement models must move away
from paying for inputs towards paying for
outcomes or value delivered.
•
Move towards bundled payments for the
whole spectrum of the care cycle
•
Integrated healthcare – organised around
medical conditions, with the customer at
the centre that takes on-board the whole
care cycle
Outcomes are measured every time
•
Treatment provided is the most
appropriate and cost effective setting
•
Connected health technology – ensuring
the coordinated pathway for the patient
through the system
The new healthcare landscape: Pharmaceuticals & Medical Devices
• A major cost driver for insurers is the rising costs of new
drugs and medical technology
• Vhi set up the PMIU in 2013 to focus on this area
• The focus is on ensuring our customers continue to have
access to the latest drugs and technologies – the
challenge is how we pay for these?
• Ensuring cost effectiveness & Value
• New Delivery settings
• Innovative Reimbursement Models
The new healthcare landscape: International Trends
UK
• Setting standards & treatment guidelines
• Influencing patients behaviours and choices
Netherlands:
• Concentration and specialisation– selective contracting; refusing to
contract with small volume providers
Australia (MediBank) & New Zeland (Southerncross)
• Insurers developing partnerships– (setting up integrated primary care
centres, GP practices )
The new healthcare landscape: Collaborative Models
Working together to achieve one aim: Better patient outcomes at lower costs
Insurers
Government
Patient
Pharma &
Life-science
Providers
Thank You