Competition in the Irish Private Health Insurance Market

not-for-profit insurers has posed challenges to non-profit or mutual companies
operating according to more solidarity-based practices. In several EU markets,
insurers behave similarly regardless of their profit orientation. In countries with
both group and individual coverage, employer-sponsored markets tend to be
more price competitive than individual markets, because of the bargaining power
exercised by employers and insurers’ desire to attract large groups.
38. The ownership of insurers and the scope of their activities may also pose
market challenges. While competition is arguably limited by the presence of few
players, such as in the Irish insurance system, the existence of several players is
not the only measure of market competitiveness. Mobility across insurers is low in
many OECD countries. It is also sometimes challenging to establish incentives for
“healthy” and equitable competition among PHI insurers, as they face incentives
to concentrate on good risks, thereby failing to cover more vulnerable individuals.
The involvement by private health insurers who are affiliates of social insurers in
differently regulated statutory and voluntary health insurance compartments may
pose challenges for competition and consumer mobility in both the public and
private insurance systems (as in the Netherlands and Switzerland). This is
because individuals find it difficult or impractical to change PHI insurers, rather
than maintain the same insurer for social and private cover; for example, risk
selection within the private component can present difficulties for both types of
coverage.
Footnote 24.
For example, there is little consumer switching in Switzerland, the
Netherlands and Australia, although in Switzerland (for basic cover) and
Australia, open enrolment means that consumers are entitled to switch at
certain times (Switzerland) or any time (Australia). Limited switching of
insurers can be explained with high transaction and informational cost.
Several countries have enacted “portability” provisions to enable
consumers to change insurers without certain penalising exclusions,
including Australia, the United States, and Ireland.
“PHI has removed little cost pressure from public health financing systems”
93. Several OECD countries encourage the development of private health
insurance markets in order to shift cost pressures from public health systems to
the private sector. Policymakers have done so in three main ways. In Australia,
Ireland, and the United Kingdom, among others, PHI is allowed to duplicate
coverage offered by universal public programmes. In some of these countries this
reflects a primary policy goal of diverting some demand and cost pressures from
publicly funded to privately funded hospitals. Germany, the Netherlands and the
United States have chosen to set income or population-based eligibility criteria for
public health insurance, or permitted certain populations to opt out of public
coverage. In other countries, there has been a delisting of coverage for some
services – thereby creating a potential niche for PHI coverage (for example,
dental care in the Netherlands and Australia).
94. While in principle PHI can help shift cost from the public sector, a review of
the evidence indicates that this has only occurred to a small extent. The….
“Achieving value-based competition has proven difficult”
108. Policymakers in several OECD countries promote competition in insurance
markets as a tool to extract better efficiency and responsiveness from their health
systems. Competition is viewed as the mechanism to stimulate performance
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