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According to the most recent figures provided by the Health Insurance Authority (HIA), the number of people with private health insurance has steadily increased since the post-crash lows of December 2014.
The HIA says that, as of the end of June this year, there were 2,195,000 people insured. This is an increase of 38,000 from the previous year.
However, it is still lower than the market peak at the end of 2008, when 2.8 million people had insurance.
Based on Central Statistics Office (CSO) population estimates, the HIA says that the percentage of the population with private coverage is 45.3 per cent, which compares to 50.9 per cent at the 2008 peak.
Despite the recent increase, the market is set for some serious upheavals.
These are partly due to changes in the risk equalisation scheme and the underlying demographic and chronic illness trends (see panel top of page 5). Also, major policy commitments – namely Sláintecare – could have a big impact on private health insurance.
Indeed, looking at overall Government policy in this area of interaction between public and private care it may be fair to ask – is there an inherent contradiction?
The Government on the one hand publicly supports the Sláintecare Report, although the level of this support is contested by some in the opposition (see panel bottom of page 5).
Supporters of Sláintecare and the HIA predict that the implementation of the all-party 10-year plan for a new health service would greatly reduce the number of people purchasing private insurance.
On the other hand, the Government supports lifetime community rating (LCR), which ‘encourages’ people under the age of 35 to enter the private health insurance market, to help sustain that market. The policy, which was opposed by many in the opposition, was introduced by then Minister for Health Leo Varadkar in 2015. Loadings were introduced to apply to people aged higher than 34 taking out inpatient private health insurance for the first time after 30 April 2015.
Those involved in the private market have raised some concerns regarding the implications of Sláintecare. At a Society of Actuaries in Ireland seminar on risk equalisation in Dublin last month (26 September), attended by the Medical Independent (MI), Mr John Armstrong, a long-standing health insurance actuary in the Irish market and a researcher at the Erasmus University in Rotterdam, said: “I would have liked to have seen more discussion of the positive role of private health insurance in the Sláintecare Report. Solidarity mechanisms, such as community rating and risk equalisation, provide a clear indication of how private health insurance can be used for the common good as espoused in the report.”
However, many supporters of Sláintecare say its successful implementation would improve the public system to such an extent that the need for private insurance would drain away.
On this very issue, the HIA has laid out two distinct scenarios on the potential impact of Sláintecare on the private heath insurance market.
In its submission to the Independent Review Group to examine the removal of private practice from public acute hospitals chaired by Dr Donal de Buitléir, the HIA predicts in its first scenario that a fully-implemented Sláintecare Report would greatly shrink the private insurance market.
“Following the implementation of the Sláintecare proposals, the proportion of the population with health insurance could enter structural decline from the current level of 45 per cent, albeit a gradual one,” the HIA foresees in its submission.
The Authority notes that “while it is quite unlikely” that the proportion of the population with private insurance drops to UK levels of less than 10 per cent, “it is very possible that it would decline over a 15-year period towards 30 per cent and possibly below.”
The HIA predicts that such a flight from the private market would be led by the young and healthy, “which would result in higher premiums on average and the risk that higher premiums would lead to even more relatively healthy people dropping health insurance and consequent further increases in premiums.”
Notably, the HIA adds that such a scenario would require serious and sustained Government funding of Sláintecare. The type of funding that would see waiting times for elective care in public hospitals reduced to below the 12-week target outlined in the 10-year plan.
“Front loading of spending and surgical activity would also be required to achieve a major reduction in waiting times within a reasonable space of time.”
In the same submission, the HIA paints a picture of a second scenario that it envisions for private health insurance under Sláintecare.
This is a far less radical forecast, where waiting lists in public hospitals “might continue to be quite long, probably because future Governments don’t increase spending and resources in public hospitals by sufficiently large amounts to achieve short waiting times for elective procedures or significant increases in public hospitals capacity might be delayed”.
In this second scenario, the HIA says the proportion of the population with health insurance would remain broadly where it is at present; that is, between 40 per cent and 50 per cent of the population.
However, this prediction is one where Sláintecare is essentially not funded and supporters of the plan have insisted that an unfunded Sláintecare is not Sláintecare at all.
The future of the risk equalisation scheme and private health insurance was discussed at a conference hosted by the Society of Actuaries in Ireland in Dublin and attended by MI last month. Risk equalisation is the tool that is used to provide for cross-subsidies between consumers in the market depending upon their risk characteristics. It is part of the system of community rating, which is a requirement in the Irish health insurance market that all consumers should be charged the same premium regardless of their risk profile.
The seminar heard of rising levels of people with private health insurance, and also some recent reductions in premiums.
However, Mr Eoin Dornan who works in the private health insurance unit in the Department of Health told the seminar that he does not believe that recent reductions in premiums are indicative of long-term trends.
“What we are looking at with current reductions in the private health insurance premiums… I don’t know that it is a good forecast for the future,” said Mr Dornan.
“What we can expect in the future is that claims will continue to rise. What we are seeing with the [recent] reduction in claims across the market, is a combination of factors. One is the effect of a reduction in private charging in public hospitals. As you know there has been quite a successful campaign by the insurers to persuade people to not use their private health insurance when they go into a public hospital, instead to avail of their entitlement as a citizen of the State.”
Mr Dornan said that we can expect in the future premiums and claims costs to continue to rise because of underlying trends such as demographic factors and the rise in chronic diseases.
Thus the HIA concludes that a fully implemented Sláintecare will lead to very significant reductions in private health insurance levels in Ireland.
Two of the leading authors and supporters of the Sláintecare Report also share this opinion.
“Well of course we don’t know what the Dr de Buitléir review [into the removal of private practice from public acute hospitals] is going to reveal,” Independent TD Dr Michael Harty and member of the Oireachtas Committee on the Future of Healthcare, which developed Slaintecare, told MI.
“I don’t think you can take private care out of public hospitals in its entirety, [but] I do think you can take elective private care out of our public hospitals. I think that public hospitals probably need private hospitals to deliver some services.”
Dr Michael Harty TD
However, Dr Harty does foresee a significant drop in the need for private health insurance if Sláintecare is delivered on.
“What Sláintecare is proposing is that private care should not be delivered at such a cost in our public system. I don’t think you can separate the two of them absolutely entirely. But we can have substantial separation,” he added.
“I think when people begin to have confidence in the public system and see that it has improved to a significant extent, then they don’t have to fear that they won’t get a service from the public system. Then people will not feel that they have to take out health insurance, to ensure they get treatment in a timely fashion.
“So, it’s all about building confidence in the public system and once that is built and proven, I think people will opt not to take out [private] health insurance, as much as they do at the moment.”
Dr Harty stressed that this would not mean the complete end of the private health insurance market. He said that there “will also be a population of people who will want to have private insurance”. He points to the experience of the UK, where despite the existence of the NHS there is still a relatively small percentage of people that takes out private health insurance.
But is there a tension or contradiction between the aims of Sláintecare and the private insurance industry?
“Well, I don’t think there is a contradiction within Sláintecare in relation to this,” Deputy Róisín Shortall (Social Democrats), Chair of the Oireachtas Committee on the Future of Healthcare, told this newspaper.
Deputy Shortall said that the logic of full implementation of the Sláintecare Report would see what she describes as a “phasing down” of private health insurance levels.
“Sláintecare was a big change in terms of thinking about how healthcare was provided,” she told MI.
“I think the Government has been wedded to the old system of a two-tiered system, which we have had since the beginning of the State, which is entirely out of step with the rest of Europe.
“That two-tier system has huge difficulties and they were stuck in that old mindset. In that context they got hung up on the issue of lifetime community rating to encourage under-35s to take out health insurance, to make the health insurance market viable. That’s what it [LCR] was designed for, it was not created to create a viable public health service.
“But I think Sláintecare is the thinking and the narrative around healthcare in Ireland now.”
Deputy Róisín Shortall
Deputy Shortall says at the end of the long process to develop Sláintecare all parties signed up to the vision of a universal public system.
“If that is the final destination which we have signed up to – well then the issues are conditional issues on how we get from here to there,” said Deputy Shortall.
“The ultimate aim of Sláintecare is to have a well-functioning, good quality public health system in which people can get timely access – now that’s not going to happen overnight,” she adds.
“You can’t get away from the reality that the poorer the public health service, the more potential there is for profit-making in the private sector and the converse applies also. If you have a really good public universal health service there are fewer opportunities to make money out of healthcare. That is the reality of it.”
So a future under a fully implemented Sláintecare would be one where private health insurance will play a far more marginal role than presently?
“As progress is made on improving access to the public service, the reality is more and more people will feel that they don’t have to be forking out €2,500-€3,000 a year in order to get access to healthcare – that is the logical conclusion,” said Deputy Shortall.
“There will be a phasing down of the levels of private health insurance. That is not to say it will go completely… there will always be people who have plenty of money to spend and want five-star hotel quality accommodation in hospital and that is absolutely fine if they want to do that. The key thing is that tax payers should not be subsidising that.”
Lifetime community rating had its critics when introduced in 2015. Some people remain doubtful of the policy. Speaking to MI last month regarding issues of health inequality, Dr Mark Murphy, a GP in Dublin, mentioned the impact of LCR.
“Sláintecare has specifically named one of the main drivers of this problem [inequality]; a malfunctioning inter-twinning of public and private sector provision, within Irish public hospitals,” said Dr Murphy.
“We need to implement Sláintecare and increase Government-funded provision of primary care services and public hospital funded services, removing private care from public hospitals.
“I say Government funding, as I believe we must resist for-profit insurance coverage in the Irish system. As an example, as [then] Minister for Health Leo Varadkar pushed thousands of working families into taking out health insurance packages before people reached the age of 35; this policy has reduced the ability of working families to save financially and transferred significant monies to private insurance companies, with limited gains for families.”
On its behalf the Government defends the “success” of LCR.
It “has proven successful in encouraging people to take out health insurance at a younger age, through the imposition of ‘late entry loadings’ of 2 per cent for those aged 35 and over taking out health insurance for the first time,” a Department spokesperson told MI.
“The purpose of the levy is to ensure a balanced market, with a sufficient proportion of younger people, who tend to make fewer health insurance claims, participating alongside older people, who tend to make more claims against their insurance.”
Asked whether the Minister for Health or the Department believe that the private health insurance market would be greatly shrunk upon the implementation of Sláintecare, the Department said the Minister was awaiting Dr de Buitléir’s review.
“Arising from a recommendation in the Sláintecare Report in relation to private care in public hospitals, the Minister established an independent review group (IRG) in late 2017 to examine the removal of private practice from public acute hospitals,” the spokesperson added.
“The IRG has been tasked with making recommendations about the practical approaches that can be taken to remove private practice from public hospitals, the impacts that this removal will have, what timeframe might apply and how to phase it over time and, in particular, to identify any adverse and unintended consequences that may arise for the public system in the separation.
“As part of their work, this independent review group is examining the impact on the insurance market of removing private care from the public hospital system.
“The group will produce a report for the Minister by year-end. When the report is received, the Minister will review it and consider the possible policy ramifications which may arise.”
Keane for progress
While acknowledging some progress, both Deputy Dr Michael Harty and Deputy Róisín Shortall raised serious concerns over the pace of implementation of the Sláintecare Report in their interviews with MI.
Both said that the coming weeks are key and the Budget will tell whether the Government will properly fund the plan.
Deputy Shortall added that she remains concerned that it is “not clear that the Taoiseach sees this as a priority for this Government”.
Both Dr Harty and Deputy Shortall are placing a lot of hope in Dr Tom Keane, who takes on his role as Chair of the Sláintecare Advisory Council this month.
Dr Harty has confidence in Dr Keane, but is concerned that he will not get enough political support.
“I think [Dr] Tom Keane understands exactly what is required in remodeling our health service, I think he would be a very strong supporter of Sláintecare and would have a substantial amount of experience and input,” according to Dr Harty
“I think he will be extremely important. I just hope that he is not going to be frustrated because when he introduced the Cancer Control Programme he had substantial political protection and political buy-in from [former Minister for Health] Mary Harney at the time and he was able to go about the reorganisation of cancer care and was protected from all the vested interests who were attempting to knock him off course.”
Dr Harty warned that he does not see “that level of political protection for Sláintecare at the moment”.
Deputy Shortall agreed. “I have to say, I am pinning a lot of my hopes on Tom Keane. He came in and presented to the Committee and he was excellent and he had a very big influence on the Sláintecare Report,” she said.
“I think his appointment is the real positive in this. Knowing what I know about Tom Keane he’s not going to hang around if the Government is not serious about doing this. He will be putting it up to the Government from the very beginning.”