Competition in the Irish Private Health Insurance Market

APPENDIX 5
OECD Review of PHI
The OECD has done considerable research on healthcare policy and as a subset of
that research, it conducted significant research on private health insurance (PHI)
in 2003 and 2004. The OECD did a general review for the OECD area (“Private
Health Insurance in OECD Countries: The Benefits and Costs for Individuals and
Health Systems, OECD 2004”), which was based on a larger report on the role
and impact of private health insurance across OECD countries. As part of that
research, the OECD did a number of case studies of individual countries, including
Ireland, Australia, the Netherlands, and France. The Australian healthcare system
and health insurance system appears to be one of the closest in format to the
Irish systems, although there are still many differences.
The following few pages illustrate relevant or important quotations from the OECD
report. The paragraph below (148) is instructive. It is from the Conclusions of
the report.
“148. It is important to be realistic about the potential benefits of competitive
PHI markets and what they most likely will not achieve. For example, costcontainment
within health systems is often best achieved through means other
than an expansion of private health insurance’s role. Unregulated PHI markets,
especially in the absence of other mechanisms to offer affordable coverage to
high-risk persons, are inadequately equipped to promote access to coverage for
people with chronic conditions and other high-risk persons. On the other hand,
serious consideration ought to be given to the value of health system
responsiveness, an area where private health insurance has contributed positively
to health system performance. Whether or not it is intended or desired, PHI
markets interact with health provision and delivery systems in several ways,
some of which are advantageous and others less so. The role of PHI should be
structured around policy goals for health financing, as well as broader health
systems’ policy objectives, to ensure policy coherence. Flexible policymaking is
also needed to address promptly any problems and undesirable outcomes that
may emerge from the interaction of private PHI markets with public systems.
The following paragraphs (15 and 17) are from the Introduction;
15. Although PHI accounts, on average, for 6.3% of total expenditure on health
(THE), its importance in funding OECD health systems varies significantly (Figure
1). The United States is the only OECD country where voluntary health insurance
represents the main health financing and coverage system for most of the
population, explaining why PHI accounted for 35% of THE in 2000. In France,
Germany, the Netherlands and Canada, the share of financing accounted for by
private health insurance ranges from 10% to 15% of THE. A similar level is found
in Switzerland, where 10% of total health expenditure comes from the voluntary
supplementary health insurance market.4 Australia, Ireland, Spain, New Zealand,
and Austria have levels of PHI financing between 4% and 10%. Private health
insurance in all other OECD countries contributes much less than 4% to funding
total health expenditures.
17. Countries can be grouped into different clusters by population coverage as
well (Table 1). There is some, but not complete, overlap between countries with a
high share of PHI financing of total health expenditure and a large privately
insured population. France, Switzerland, the United States, the Netherlands5 and
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