Competition in the Irish Private Health Insurance Market

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subscribers has grown by approximately 3% per annum in recent years. The average age of all insured is rising. At the beginning of the 1980s, the proportion of the population with health insurance was 30%. 11 2.27 The proportion of the population with health insurance has risen significantly from 1997 to 2005. BUPA Ireland’s entry into the marketplace in January 1997 caused a significant increase in total marketing effort by health insurers and this may explain some of the growth. The economy grew rapidly from 1998 to 2001, with accompanying growth in the population and labour force and fall in unemployment and this was probably also a cause of the growth in demand for health insurance. Furthermore, the consumer research on health insurance shows that there was a continued perception among the public that the public health services were inadequate and that waiting lists for admission to a public hospital for a public patient were long. 12 Figure 1: Long-term PHI open-enrolment trend PHI: Long term trend (open enrolment) 2500000 2000000 1500000 1000000 500000 0 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 Source: Vhi Healthcare membership and HIA levy returns 13 11 Source: Vhi Healthcare. 12 Amarach survey, 2003, and Insight Survey, 2005; both commissioned by the HIA. 13 Data are for end-February each year. Estimates were made for BUPA membership for the end of February 1997 to 2000. 27
Figure 2: Annual Change in PHI membership, 1973-2006 PHI: Annual change (open enrolment) (%) 25% 20% 15% 10% 5% 0% -5% 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 NB: The large increase in demand in 1988 was mostly accounted for by the new VHI “Plan P”, which only provides cover for the €60 daily public bed inpatient charge. Determinants of Demand for PHI in Ireland 2.28 A view has been expressed recently within the industry that the proportion of insured is unlikely to continue to rise in a similar fashion to the recent past or indeed compared to the long-term trend. However, other industry leaders have disputed this view. Other views have emphasised the probability of a high rate of growth in the total value of premium income. 2.29 Economic research indicates that the main determinants of demand for PHI in Ireland in terms of a time trend would appear to be; 14 • Waiting lists in the public system and perceptions of the quality of public system care. • Employment growth, • Real incomes, • Price of PHI The long established nature of and the availability under open enrolment of PHI appear to be a positive influence on the relatively high level of penetration of PHI in the population. 2.30 Occupational group and marital status are also significant influences, according to economic research and survey research by the Authority. Members of the professional occupational class tend to have a high probability of having PHI. Individuals who are in a clerical occupation or are married also have a higher probability of having PHI. 2.31 In economic terms, the trend in employment and the trend in real incomes can be combined into a single trend of real GNP. The trend in 14 Nolan and Wiley (2000), “Private Practice in Irish Public Hospitals”. ESRI General Research Series 175.. 28
Page 1 and 2: A Report to the Minister for Health
Page 3 and 4: CONTENTS TABLE OF FIGURES _________
Page 5 and 6: CONSUMER ATTITUDES TO SWITCHING ___
Page 7 and 8: EXECUTIVE SUMMARY AND RECOMMENDATIO
Page 9 and 10: As a result it does not have to sat
Page 11 and 12: Recommendation 7 The Minister for H
Page 13 and 14: indicates that consumers of PHI hav
Page 15 and 16: Recommendation 13 The Minister for
Page 17 and 18: is quite unclear, so far as the Aut
Page 19 and 20: 1.4 For the next number of months t
Page 21 and 22: other insurers were to enter the ma
Page 23 and 24: 2.6 Private health insurance (PHI)
Page 25 and 26: 2.17 Open enrolment and lifetime co
Page 27: • 2001: The Health Insurance Auth
Page 31 and 32: of medical inflation and the higher
Page 33 and 34: VIVAS Health is rising steadily. In
Page 35 and 36: • Table 1 below shows the annual
Page 37 and 38: Figure 6: PHI Products BUPA Ireland
Page 39 and 40: • Work-based group schemes where
Page 41 and 42: from year to year and also during t
Page 43 and 44: 3. DEFINING THE PRIVATE HEALTH INSU
Page 45 and 46: Figure 7: Key features of Related H
Page 47 and 48: price increase unprofitable by a hy
Page 49 and 50: 4.6 Aspects of the exemption from i
Page 51 and 52: and quarterly management accounts t
Page 53 and 54: Table 4: Regulation of PHI Firms 48
Page 55 and 56: 4.31 This is a positive step. Just
Page 57 and 58: obliges Vhi Healthcare to seek appr
Page 59 and 60: 4.41 In the regulatory approval pro
Page 61 and 62: 4.50 However, the Authority is clea
Page 63 and 64: Unfunded Lifetime Community Rating
Page 65 and 66: President of the Society of Actuari
Page 67 and 68: − The main other deterrent at pre
Page 69 and 70: o The former members of the Advisor
Page 71 and 72: materially affected by any seasonal
Page 73 and 74: It may also be noted that the propo
Page 75 and 76: 4.94 There are 37 health insurers i
Page 77 and 78: Interviews with Possible New Entran
Page 79 and 80:
have shown that new sales and switc
Page 81 and 82:
not binding on incumbents and no in
Page 83 and 84:
5.33 In this context Vhi Healthcare
Page 85 and 86:
5.44 As the former incumbent monopo
Page 87 and 88:
5.52 Vhi Healthcare’s first mover
Page 89 and 90:
• Psychological costs 6.5 Transac
Page 91 and 92:
18-24 9% 13% 25-34 34% 19% 35-44 31
Page 93 and 94:
6.24 The provision of renewal notic
Page 95 and 96:
The HIA publishes on its website a
Page 97 and 98:
Recommendation 10 Following consult
Page 99 and 100:
Recommendation 11 The insurance com
Page 101 and 102:
Regulations were established to aff
Page 103 and 104:
transferred and the amounts require
Page 105 and 106:
Buyer Power and Concentrated Market
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
Page 115 and 116:
Questions Relevant evidence Irish P
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 and 150:
Conclusion of normal claim payments
Page 151 and 152:
APPENDIX 3 Consumer Attitudes to Sw
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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