Competition in the Irish Private Health Insurance Market

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1.39 On the other hand the Australian system does also act to some degree as a reassurance system, which is what it is called in Australia. For example, in the previous bullet point if the higher claims for one of the companies were due to random fluctuations rather than bad claims control then again this bad experience would be spread across the two companies, effectively reassuring some of the excess claims. 1.40 This is in contrast to the Irish system where, for instance if BUPA had bad claims experience in a half year on its older lives, this bad experience is amplified and leads to higher equalisation payments by BUPA when it is given a market share of older members. 1.41 The initial analysis above suggests that if the perception was that the Australian system applied to Ireland would result in significantly reduced transfers from BUPA then, subject to a more complete analysis, that perception is not correct. Given this, and that it is apparent that the Australian and Irish systems of equalisation have different features, it is not clear without more detailed study that there are clear overall advantages in moving from the current system to the Australian one. 1.42 In addition it should be noted that the Australians are just about to implement a new risk equalisation scheme. The Private Health Insurance Administration Council of Australia in their annual report “Operations of the Registered Health Benefits Organisations Annual Report 2005–06” state the following on page 3: “Risk equalisation After considerable debate over recent years, the final form of amendments to the risk equalisation scheme (previously called reinsurance) has been determined. The new scheme will take effect from 1 April 2007. PHIAC is working closely with industry and the Department of Health and Ageing to finalise arrangements to implement this new risk equalisation scheme.” This report takes no account of the proposed changes to the Australian system. 149
APPENDIX 3 Consumer Attitudes to Switching These tables are taken from the HIA/Insight Market Review, published in September 2005 and available online at www.hia.ie. Survey Respondent Reasons for Switching Why did you decide to change insurers? What was the main factor that led you to change your health insurer? Main Factor New insurer was cheaper/ Cost savings 48% Level of cover was better 12% New insurer had a better product/ service range 8% Recommendation by friend 2% Group scheme switched 8% Level of information and advice better 2% Changed employer 3% Had bad experience with previous insurer 4% Dissatisfaction with service provision of previous insurer 2% Recommendation from family member 1% No choice/ Not my decision 3% Wanted to support competition 0% Recommendation from other 1% Wanted to switch to an Irish company 0% Don’t Know 0% Other 5% 150
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A Report to the Minister for Health
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CONTENTS TABLE OF FIGURES _________
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CONSUMER ATTITUDES TO SWITCHING ___
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EXECUTIVE SUMMARY AND RECOMMENDATIO
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As a result it does not have to sat
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Recommendation 7 The Minister for H
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indicates that consumers of PHI hav
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Recommendation 13 The Minister for
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is quite unclear, so far as the Aut
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1.4 For the next number of months t
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other insurers were to enter the ma
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2.6 Private health insurance (PHI)
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2.17 Open enrolment and lifetime co
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• 2001: The Health Insurance Auth
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Figure 2: Annual Change in PHI memb
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of medical inflation and the higher
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VIVAS Health is rising steadily. In
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• Table 1 below shows the annual
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Figure 6: PHI Products BUPA Ireland
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• Work-based group schemes where
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from year to year and also during t
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3. DEFINING THE PRIVATE HEALTH INSU
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Figure 7: Key features of Related H
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price increase unprofitable by a hy
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4.6 Aspects of the exemption from i
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and quarterly management accounts t
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Table 4: Regulation of PHI Firms 48
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4.31 This is a positive step. Just
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obliges Vhi Healthcare to seek appr
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4.41 In the regulatory approval pro
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4.50 However, the Authority is clea
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Unfunded Lifetime Community Rating
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President of the Society of Actuari
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− The main other deterrent at pre
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o The former members of the Advisor
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materially affected by any seasonal
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It may also be noted that the propo
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4.94 There are 37 health insurers i
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Interviews with Possible New Entran
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have shown that new sales and switc
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not binding on incumbents and no in
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5.33 In this context Vhi Healthcare
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5.44 As the former incumbent monopo
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5.52 Vhi Healthcare’s first mover
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• Psychological costs 6.5 Transac
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18-24 9% 13% 25-34 34% 19% 35-44 31
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6.24 The provision of renewal notic
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The HIA publishes on its website a
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Recommendation 10 Following consult
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Page 103 and 104: transferred and the amounts require
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Page 107 and 108: The Supply of Private Medical Facil
Page 109 and 110: VIVAS Health claims that Vhi Health
Page 111 and 112: approval on coverage of facilities
Page 113 and 114: Supplier-Induced Demand 7.36 The Vh
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Page 117 and 118: to restrict individual choice of pr
Page 119 and 120: 8. CONCENTRATION AND MARKET POWER I
Page 121 and 122: gives us some indication of the com
Page 123 and 124: wishes to retain the flexibility to
Page 125 and 126: largest price increase that is prof
Page 127 and 128: scheme. Employees may be under the
Page 129 and 130: elevant regulatory requirements, ex
Page 131 and 132: Table 7 Vhi Healthcare Financial Re
Page 133 and 134: • There is limited buyer power fr
Page 135 and 136: Breaking up Vhi Healthcare would di
Page 137 and 138: expertise and other staff resources
Page 139 and 140: APPENDIX 1 Other forms of health re
Page 141 and 142: APPENDIX 2 Report of UK Government
Page 143 and 144: Australia Ireland Public hospital U
Page 145 and 146: Australia Ireland Risk equalisation
Page 147 and 148: 1.22 The Irish data is not split at
Page 149: Conclusion of normal claim payments
Page 153 and 154: Survey Respondent factors promoting
Page 155 and 156: APPENDIX 5 OECD Review of PHI The O
Page 157 and 158: not-for-profit insurers has posed c
Page 159 and 160: 114. Private insurers have not impl
Page 161 and 162: APPENDIX 6 List of Submissions The
Page 163 and 164: Understanding and Comparing Private
Page 165 and 166: Benefits Outpatient Cover Cover for
Page 167 and 168: Dobson, P., M. Waterson and A. Chu,
Page 169: Vhi Healthcare (2005), Annual Repor
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Competition in the Irish Private Health Insurance Market

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