Work on a universal health insurance model continues. Stephen Dineen examines what lies ahead for the health insurance market.
Health Minister James Reilly has established a taskforce on the implementation of universal health insurance (UHI). Chaired by the Department’s Assistant Secretary Dr Fergal Lynch, the 11-member taskforce has met once and is expected to meet again before Easter. A department spokeswoman said the group will report to the Minister on an ongoing basis. Reilly has promised a white paper on UHI financing “towards the end of the year.”
A commitment to UHI by 2016 is contained in the Programme for Government. UHI with equal access to care for all is promised, combined with an end to the two-tier unequal access to hospital care. Access will be defined “according to need” and payment “according to the ability to pay.”
Among the features envisaged by the Programme for Government are:
- guaranteed access to care to be the same as that currently available to those with private insurance, with people compelled to get insurance from the public insurer (Vhi healthcare is to stay in state ownership) or private insurers;
- a hospital insurance fund to be established, into which exchequer funding for hospital care will go. This will subsidise or pay insurance premia for those who qualify for a subsidy. The fund will also pay for services not covered by the UHI package and will oversee “a strong and reformed system of community rating and risk equalisation.” What is covered by UHI will be determined by the Minister in consultation with the fund, and reviewed regularly;
- insurers “will not be allowed to sell insurance giving faster access to procedures covered by the UHI package” nor will hospitals and clinics that supply care under UHI be allowed to sell faster access to procedures covered by it; and
- public hospitals will no longer be managed by the HSE, and will be “independent, not-for-profit hospitals with managers accountable to their boards.”
The Netherlands’ UHI model is often cited by Reilly, and his officials visited it last June to examine the system. Statutory health insurance, provided by private insurers, has existed there since 2006. Insurers are legally required to provide a standard benefit package to cover certain care, including that provided by GPs and specialists. Hospitalisation, certain dental care, medical aids, pharmaceutical, maternity and paramedical care are also included. Mental care is covered for the first year. As with the Irish proposal, the government defines the benefit package.
The system is financed through a nationally defined income-related contribution and community-rated premiums are set by each insurer. People’s contributions are distributed among insurers based on a risk-adjusted capitation formula based on factors such as age and gender. Government pays the premiums of children up to 18, while 40 per cent of the population receive income-related premium assistance.
There are five insurance companies dominating the Dutch health insurance market, accounting for over 89 per cent of it in 2009. The Dutch care authority determines health provider fees. In 2012, 75 per cent of health provider fees will be determined through negotiation between insurers and providers. Complementary (voluntary) health insurance accounts for insurance spending (e.g. additional dentistry coverage), but policy holders do not receive faster access to any type of care or more choice of specialist or hospital. Eighty per cent of people purchase extra benefits.
With the requirement to use a community-rating, insurers can selectively contract with providers, therefore insurers compete on quality rather than risk selection.
Proponents of the UHI model say competition among private insurers drives down healthcare spending, enhances consumer choice and improves quality of care and responsiveness to needs. In its 2011 review of health care systems, the Commonwealth Fund, a US health foundation, found that Dutch people’s ability to get same or next day medical appointments when sick was the third highest of 10 developed countries (72 per cent). Dutch people had the least difficulty in getting after-hour care (16 per cent). Only six per cent experienced access barriers due to cost, second only to the UK (five per cent).
Critics of the Dutch model point to rising health insurance for families (by 2011 it had risen by 41 per cent since UHI was introduced), an increased regulatory role for government and the small numbers of people switching insurance provider (an average of four per cent between 2007 and 2011). Healthcare spending has risen significantly in the Netherlands under UHI, with expenditure at 12 per cent of GDP in 2009 according to the latest OECD figures (the OECD average was 9.5 per cent).
University of Rennes economist Professor Pascale Turquet has concluded that the prerequisites for market competition do not appear to exist in the Dutch health insurance market. In a January paper on health insurance financing reforms in Germany, the Netherlands and France, he said Dutch insurance companies “do not act like real buyers of health care.” Instead, they register all care providers without any form of selective contracting.
Turquet concluded that “the introduction of competition in the field of mandatory health insurance coverage or the transfer of costs toward the private sector (to be met by the patient or by voluntary insurance) have not up to now provided evidence of their effectiveness.”
A possible complication for the Government’s UHI plan is competition law. While the Programme for Government has stated that as a statutory system, guaranteed by the State, it will not be subject to European or national competition law, former chair of the Competition Authority Declan Purcell has said that if there is a public choice between health insurance companies and patients’ choice between health providers, competition law would apply.
Engagement with the Competition Authority will form part of the UHI taskforce’s deliberations.
A market in flux
Rising insurance costs have coincided with a decline in the number of people with private health insurance. From a peak of 2.3 million people in 2008, it fell to 2.16 million by the end of 2011, representing 47.2 per cent of the population.
The Government plans to introduce a new risk equalisation scheme from January 2013 to equalise insurance cost differences arising from variations in the health status of a company’s members.
In December, Reilly announced there would be increased charges on private patients, hospitals would be allowed raise charges on all private patients in public hospitals, and that there would be a further increase for private beds in public hospitals. Vhi healthcare has said changes in charges for private beds in public hospitals could force premium increases of at least 50 per cent, while Reilly has said that greater efficiencies and savings should minimise any increase in premia. He has established a consultative forum on health insurance, which includes representatives of the three insurances companies, the department and the Health Insurance Authority.