Competition in the Irish Private Health Insurance Market

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Competition in the Irish Private Health Insurance Market A Report to the Minister for Health and Children January, 2007
CONTENTS TABLE OF FIGURES _____________________________________________________________ 5 EXECUTIVE SUMMARY AND RECOMMENDATIONS_______________________________ 6 1. INTRODUCTION __________________________________________________________ 17 TERMS OF REFERENCE ___________________________________________________________ 17 BACKGROUND _________________________________________________________________ 18 STRUCTURE OF THE REPORT_______________________________________________________ 18 IMPLICATIONS OF THE WITHDRAWAL OF BUPA IRELAND ________________________________ 19 2. THE PRIVATE HEALTH INSURANCE MARKET ______________________________ 21 SUMMARY ____________________________________________________________________ 21 WHAT IS PRIVATE HEALTH INSURANCE IN IRELAND? ___________________________________ 21 THE ROLE OF PRIVATE HEALTH INSURANCE IN IRELAND_________________________________ 22 STATUTORY BACKGROUND TO PRIVATE HEALTH INSURANCE IN IRELAND ___________________ 22 IRISH HEALTH INSURANCE LEGISLATION _____________________________________________ 23 THE HEALTH INSURANCE AUTHORITY _______________________________________________ 24 DEMAND FOR PRIVATE HEALTH INSURANCE __________________________________________ 26 SUPPLY OF PRIVATE HEALTH INSURANCE ____________________________________________ 31 PRIVATE HEALTH INSURANCE PRODUCTS ____________________________________________ 35 PRIVATE HEALTH INSURANCE PRICES _______________________________________________ 38 CONCLUSION __________________________________________________________________ 41 3. DEFINING THE PRIVATE HEALTH INSURANCE MARKET____________________ 42 SUMMARY ____________________________________________________________________ 42 THE RELEVANT PRODUCT MARKET FOR PRIVATE HEALTH INSURANCE _____________________ 42 CONCLUSION __________________________________________________________________ 46 4. REGULATION OF THE IRISH PHI MARKET _________________________________ 47 SUMMARY ____________________________________________________________________ 47 EU NON-LIFE INSURANCE DIRECTIVES ______________________________________________ 48 REGULATION OF BUPA IRELAND___________________________________________________ 49 REGULATION OF VIVAS HEALTH __________________________________________________ 49 STATUTORY REGULATION OF VHI HEALTHCARE _______________________________________ 50 BENEFITS TO VHI HEALTHCARE OF DIRECTIVE EXEMPTIONS ______________________________ 52 RECOMMENDATIONS ____________________________________________________________ 54 THE HEALTH INSURANCE ACTS ____________________________________________________ 57 ROLE OF THE HEALTH INSURANCE AUTHORITY ________________________________________ 58 FUNCTIONS OF THE HEALTH INSURANCE AUTHORITY ___________________________________ 60 UNFUNDED LIFETIME COMMUNITY RATING___________________________________________ 62 RISK EQUALISATION ____________________________________________________________ 62 AUSTRALIAN RISK EQUALISATION SCHEME___________________________________________ 73 5. BARRIERS TO ENTRY _____________________________________________________ 75 SUMMARY ____________________________________________________________________ 75 INTERVIEWS WITH POSSIBLE NEW ENTRANTS _________________________________________ 76 RISK EQUALISATION ____________________________________________________________ 77 SOLVENCY MARGINS FOR HEALTH INSURANCE COMPANIES ______________________________ 79 INVESTMENT AND SET-UP COSTS ___________________________________________________ 80 MARKET PENETRATION __________________________________________________________ 81 MARKET CONCENTRATION________________________________________________________ 81 CHANGES TO THE MARKET PLAYERS ________________________________________________ 81 FIRST MOVER ADVANTAGES ______________________________________________________ 81 SALARY DEDUCTION MECHANISMS _________________________________________________ 83 CONCLUSION __________________________________________________________________ 85 2
Page 1: A Report to the Minister for Health
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 and 28: • 2001: The Health Insurance Auth
Page 29 and 30: Figure 2: Annual Change in PHI memb
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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