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An insurance reform roadmap

Posted in Articles by saraburke on January 27, 2014

If implemented, the recommendations of the report into the cost of private health insurance would make a difference to the Minister’s plans for universal care. Column from Medical Independent on 23 January 2014. In the Department of Health’s own inimitable style, it published a report on reducing the cost of private health insurance so as to ensure its long-term sustainability on St Stephen’s Day. Much of its overall content is already known, but, crucially, it provides much greater detail in an accessible, easy-to-read way. Private health insurance is usually conveniently clouded by confusion and complexity. This report helps demystify this important health policy issue.

The Review of Measures to Reduce Costs in the Private Health Insurance Market is an independent report commissioned by the Minister for Health and the Consultative Forum on Health Insurance. Health Minister Dr James Reilly set up the forum late in 2011 and in June 2013, Mr Pat McLoughlin was appointed “the chairman of a review group under the auspices of the consultative forum”. To produce their incisive, concisely written interim report within five months is productive by any standards (dated November 2013).

The report details the decline in the health insurance market from 50.9 per cent of the population in 2008 to 44.6 per cent in 2013. It shows how average premia have risen from €671 per person in 2007 to €1,048 in 2012 – an average increase of 6.7 per cent per annum between 2004 and 2008, and 12.6 per cent between 2008 and 2012. It is remarkable, given these figures, that just 250,093 people dropped their cover, while over two million people still have insurance.

The review usefully gives the age breakdown of the insured. For example, between January 2012 and 2013, there were declining numbers of all people under 64 years of age and increasing numbers for those aged 65 and over. As expected, the biggest decline is in the youngest. Obviously, if the status quo is maintained, those dwindling numbers of middle aged and older people who are insured will continue to pay more. Although the report is unable to identify the tipping point, ie when private health insurance will become unaffordable for most, it is inevitable that this will happen unless measures are taken.

Irish citizens highly value their health insurance, and they are right to, because it ensures speedier access to diagnosis and hospital treatment in most cases except emergencies, urgent cases and cancer care.

The report makes 32 recommendations under nine areas. Up front is the need to “understand in some detail the drivers behind the rising costs in the private health insurance industry”. To do this, the Health Insurance Authority (HIA) will now be collecting data on all surgical and medical cases. This will allow all cases to be scrutinised to ensure they are the right treatments, being carried out in the right place, by the right people. One wonders what on earth the HIA were doing up to now?

However, the above data will allow planners, payers and users of services to know if a treatment is being carried out in an in-patient setting when it should be a day case. The way the market is currently structured, it incentivises the over-treatment of many in-patients. Similarly, it points out how cataracts are currently overpaid for, that 75 per cent of patients should be admitted on the day of treatment, while private care in public hospitals should be paid for using Diagnostic Related Groups.

It recommends “lifetime community rating” which makes total common sense so that there are incentives in place for younger people to sign up to health insurance early on.

The report usefully highlights the absence of out-patient and community services for private psychiatric patients, which results in much longer lengths of hospital stays for such care, which is contrary to good practice. And how current insurance practices largely mitigate the care of chronic diseases, despite the fact that 80 per cent of GP consultations are chronic disease related and 66 per cent of emergency admissions are “exacerbations of their chronic diseases”.

There is much more in the report than can be set out here, but, crucially, it calls for the private insurance industry to acknowledge and address fraud, waste and abuse, including funding a whistle-blower initiative.

The report supports recent initiatives of Minister Reilly’s such as the risk equalisation, which took effect in January 2013. Critical to the detail and recommendations in this report is involvement of the health insurance industry. If the health minister wants his big idea of universal health insurance to become a reality, he needs to act upon this report, now.

The full report is available here.

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