Competition in the Irish Private Health Insurance Market

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Figure 4: PHI Market Share, 1996-2006 PHI Market Shares 100.0% 90.0% 80.0% 99.3% 97.2% 94.5% 91.3% 88.5% 86.0% 83.4% 80.8% 79.0% 76.4% 75.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 19.2% 20.8% 22.0% 22.2% 16.6% 14.0% 11.5% 8.7% 5.5% 0.7% 0.0% 2.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 1.6% 2.8% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sep-06 VHI BUPA VIVAS Source: White Paper 1999, HIA market data from levy returns, Competition Authority/HIA Research, HIA estimates for BUPA data for 1997 to 2000. The data is for end-Feb in each year except the last data entry, which is September 2006. 2.50 Aggregate membership data conceals two-way flows of members who are joining, leaving or switching between the three insurers. • In the case of Vhi Healthcare, although its total membership is static, hovering around 1.5 million over the last five years, there is a significant two-way membership flow in terms of new members joining and members leaving. It has lost significant numbers of members who switched to BUPA Ireland and VIVAS Health and is also losing other members through death and cessation of PHI. However, these losses are being counterbalanced at present by a significant level of new sales. It is succeeding in recruiting a substantial proportion of newly insured consumers. In addition, a large number of newly born children become dependent subscribers each year with Vhi Healthcare. • BUPA Ireland has also experienced some lapses of policies but new members exceeded the number of lost members by a significant degree. As a result, BUPA Ireland’s total membership has grown strongly. For example, in the twelve months to the end of June 2005, BUPA Ireland gained approximately 70,000 new members 23 but appears to have lost approximately 34,000 to result in a net gain of 36,518 members. • VIVAS Health’s membership is also growing strongly. Its total membership grew by 19,000 in 2005 and by a further 37,000 in the nine months to September 2006. 23 Source:Report of the HIA to the Minister pursuant to Article 10 of the Risk Equalisation Scheme, October 2005. 33
• Table 1 below shows the annual change in membership numbers by insurer between 2002 and 2005 and for the nine months to September 2006. It is noteworthy that the incremental growth in the total market is almost entirely accounted for by growth in BUPA Ireland and VIVAS Health’s membership. Table 1: Annual Change in Membership Numbers by Insurer and in the Total Market between 2002 and 2005 and for the 9 month period to Sept 2006 Vhi BUPA VIVAS Total Market Healthcare Ireland Health Dec-02 23,611 47,603 - 71,214 Dec-03 -7,628 64,719 - 57,091 Dec-04 837 53,742 1,019 55,598 Dec-05 1,047 40,845 19,073 60,965 Sep-06 -6,065 16,857 37,638 48,430* Source: Calculated from HIA Data * NB: nine-month data 2.51 The preceding analysis looked at market shares on the basis of total membership numbers. It is also interesting to consider other measures of market shares. • New Sales: All three insurers are successfully attracting new members. New sales of PHI in the twelve months to June 2005 amounted to approximately 191,000 members, with Vhi Healthcare gaining about 115,000 (60%), BUPA Ireland about 70,000 (37%) and VIVAS Health about 6,000 (3%). • Age Groups: If the PHI market is considered on the basis of different age categories of members, Vhi Healthcare’s market share increases in the older, less profitable age cohorts. 24 In the 0-17 age group Vhi Healthcare has 72% of the market while BUPA Ireland has over 26% and VIVAS Health has almost 2%. Vhi Healthcare’s lowest market share is in the 30-39 age group at around 69% compared to 30% for BUPA Ireland and 2% for VIVAS Health. Vhi Healthcare’s market share increases significantly for people over 60 and in the 80+ age group it is 98%. 24 Of benefits that are subject to risk equalisation, benefits per person paid for those over the age of 70 are more than five times the benefits per person paid for those under the age of 70. Source: Report of the HIA to the Minister pursuant to Article 10 of the Risk Equalisation Scheme, October 2005. 34
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 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: VIVAS Health is rising steadily. In
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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