Private Health Insurance Market Research Articles

Preconditions for efficiency and affordability in mixed health systems: are they fulfilled in the Australian public-private mix?

The Australian health system is characterised by high quality care by international standards, produced by a mix of public and private provision and funding of healthcare services. Despite good overall results, three issues are of concern. The first issue relates to the public procurement of healthcare, whose flaws have impacted individuals' access to care, and the high out-of-pocket spending. The second issue concerns the sustainability of the private health insurance market, given the government's goal of relieving cost and capacity from the public scheme, incentivising participation. Third, there are existing inefficiencies and inequities related to the duplication resulting from the interaction between public and private schemes. To ensure a sustainable, efficient and equitable health system, structural reforms are necessary to achieve long-term performance improvements. Using a framework for mixed public-private health systems, we assess the extent to which the Australian healthcare system achieves preconditions for efficiency and affordability in competitive healthcare markets.

The financialization of healthcare

In contemporary capitalism, finance has extended its reach to encompass a growing array of economic sectors traditionally associated with public provisioning or social policy, with healthcare emerging as a prominent domain where fictitious capital has flourished. Financialization exerts a direct influence on the delivery of public health services while also reshaping the behavior and operations of private healthcare providers and health insurance firms. This paper aims to characterize the process of financialization of healthcare in Brazil by analyzing the behavior of firms in the private health insurance market from 2007 to 2019. These firms provide healthcare coverage alongside the functioning of the Unified Health System (SUS), constituting an avenue for the accumulation of capital. The paper analyzes how the strategies for managing assets, liabilities, and the equity of leader firms operating in the market of private healthcare plans firms, as expressed by the movements recorded in their balance sheets, inform us on their process of financialization. A set of financialization indexes is developed, addressing: (i) asset financialization; (ii) liability financialization; and (iii) the maximization of shareholder value. Economic-financial data and financial statements made available by the Brazilian Regulatory Agency for Private Health Insurance (ANS) are used to build such indexes. The results show a greater engagement of leader firms in the allocation of their resources in financial assets, but the weight of financial gains in total profits is small. Regarding indebtedness, results do not show an increase in leverage and financial burden, and does not confirm the hypothesis of increased susceptibility to creditor influence. Finally, changes in the equity structure and initial public offerings suggest a greater alignment of management practices with the standards of corporate governance established in capital markets. We conclude that those firms are increasingly serving as platforms for the financial accumulation of other economic agents and set a research agenda on this topic.

Lowering acquisition costs with a commission cap? Evidence from the German private health insurance market

AbstractWhen consumers are neither particularly financially literate nor price sensitive, insurers have a strong incentive to pay high commissions to intermediaries for profitable new business. As a part of cost reduction regulation in the German private substitutive health insurance market, a commission cap and a minimum cancelation liability period for insurance intermediaries were introduced in 2012. Despite the fact that the commission cap lowered commissions paid to intermediaries, we provide evidence that the reform was only partly effective, as it led to a decrease in reshuffling of new business in the substitutive market, but did not significantly reduce total acquisition costs of health insurers. Our findings confirm that cost regulation is tricky and can be easily circumvented by insurers, as commission payments are only a part of total acquisition costs.

Price setting in the Brazilian private health insurance sector.

Brazil's private health insurance market is the second largest in the world, behind only the United States, making it a valuable source of real-world evidence. This paper documents how physicians' inpatient reimbursement fees vary in the country and explores the relationship between these fees and the market share of health providers and health insurance companies. We implement a fixed-effects panel regression and take advantage of an unprecedented database that contains national administrative records of inpatient procedures paid by health insurance companies in 2016. We find a positive correlation between reimbursement for ICU procedures and provider market share. Conversely, we observe a negative correlation with insurers' market share. Additionally, we document substantial variation in procedure prices, both across and within Brazilian states, and observe that more competitive markets in Brazil tend to have higher population and GDP levels. Overall, our research enhances our understanding of the price setting dynamics of physician reimbursement fees in the context of a developing country. The insights gained from this study can assist policymakers in formulating appropriate regulations to ensure appropriate access to healthcare services.

The effect of public insurance policy on the private insurance market: New evidence from a quasi-experiment in China

Analyzing the net social welfare of a public health insurance policy necessitates an accurate estimation of its impact on the private health insurance market. This paper presents new evidence of the effect of public health insurance on private health insurance market by exploiting a quasi-experiment of Urban Resident Basic Medical Insurance (URBMI) in China. Our findings indicate that the implementation of URBMI has no significant effect on the aggregated private health insurance market. However, upon dividing the private health insurance market into medical and illness insurance markets, we observe a significant crowding-out effect of URBMI on the former but not the latter. This finding may help explain the mixed results in the literature, which typically lumps all segments of private health insurance markets together. In terms of the possible channels, we find that the crowding-out effect of public health insurance on private health insurance is through lowering the cost of health services, raising the accessibility to health services or reducing health risks.

Voluntary private health insurance demand by Portuguese seniors before the COVID-19 pandemic.

The Portuguese health system is mainly described as a National Health Service (NHS), but it also has some Bismarckian features. On top of these two layers of health insurance coverage, there is a market for voluntary private health insurance (VPHI). Usually, seniors are not eligible for this type of health insurance and this may serve as a complement or supplement to the NHS. The purpose of this work is to identify the main factors associated with holding a VPHI policy among seniors before the COVID-19 pandemic. We use data collected by the National Health Survey of 2019/20 and estimate a multivariate logistic regression. The main findings show that VPHI may be bought by seniors as a facilitator to access health care, either specialised or dental care. While oral health is not covered by the NHS, specialist care is only available after referral by a gatekeeper and requires a long waiting time to be scheduled. Results show that people who had an appointment with a dentist or a specialist in the last 12months are more likely to have a VPHI policy. Additionally, it was found that people benefiting from occupation-based insurance schemes are less likely to buy private health insurance. The current Portuguese health system organization based on different layers of health protection raises some issues concerning equity to health care access by seniors.

Preferences for private health insurance in China: A discrete choice experiment.

IntroductionThere is limited evidence on the sustainability and optimal design of China's private health insurance market, especially from the demand-side. With the increasing medical cost burden on both patients and the social security system, policy makers need data on potential clients' demand for private health insurance.MethodsA discrete choice experiment was conducted to explore potential clients' preferences for a type of government-involved private supplementary health insurance, Huimin Insurance, in China. A mixed logit model was used to evaluated participants' preferences for six attributes. Willingness to pay, subgroup analysis and interaction effects were estimated based on the initial model.ResultsAmong the 947 participants, 883 (93.2%) were aged 18 to 59 years and 578 (61.0%) were female. Participants had a strong preference for government involvement, extensive benefit packages, high reimbursement ratio and compensation for pre-existing conditions. With respect to the attribute of deductible, participants were indifferent between the level of CNY15,000 and CNY18,000 but had strong and significant preference for the level of CNY15,000 than CNY20,000. The premium was significantly correlated with a decline in the utility of PHI.ConclusionsAll attributes had a significant impact on participants' preference for Huimin Insurance. Providing a reference point for the development of private health insurance in China, our results inform the optimal design of PHI, especially Huimin Insurance's products.

How public and private health insurance coverage mitigates catastrophic health expenditures in Republic of Korea

BackgroundThe private health insurance (PHI) market in Republic of Korea has instituted indemnity insurance plans that provide partial reimbursements for some medical services or costs that are not covered by the National Health Insurance (NHI). To date, no study has estimated the extent to which PHI coverage lowers the economic burden of households’ access to health care. The current study aims to evaluate the design of Korea’s PHI system in terms of coverage using a catastrophic health expenditure (CHE) indicator and compare it with NHI.MethodsThis study determined the difference between the number of households that were subscribed to PHI and those that received reimbursements from PHI. Additionally, it compared the effects of reduced CHE by NHI benefits with PHI reimbursements. Furthermore, it compared PHI reimbursements based on income class. Finally, it analyzed the contribution of NHI and PHI to CHE reduction through a two-part model with hierarchical regression.ResultsThe results indicated that of the 5644 households examined, 3769 subscribed to PHI, but only 246 households received reimbursements. Notably, NHI reduced CHE incidence by 15.17%, whereas PHI only reduced CHE by 1.22%. The NHI scheme indicated reduced inequality as it provided more benefits to the low-income class for their used medical services, whereas PHI paid more reimbursements to the high-income class. Accordingly, NHI coverage has protected households from CHE and improved equality to some extent; however, PHI coverage has had a relatively low effect on relieving CHE and has increased inequality.ConclusionsThe indemnity health insurance plans of PHI companies in Korea only cover partial medical costs or services, and so, most patients do not receive reimbursements. Thus, Korea’s PHI system needs to improve to provide benefits to patients more generously and alleviate their financial burden.

Designing feasible and effective health plan payments in countries with data availability constraints

AbstractRisk equalization schemes, which transfer money to/from insurers that have above/below average risks, are a fundamental tool in regulated health insurance markets in many countries. Risk sharing (the transfer of some responsibility for costs from a plan to the regulator or the overall insurance market), are an additional method of insulating insurers who attract higher‐than‐average risks. This paper proposes, implements and quantifies incorporating risk sharing within a risk equalization scheme that can be applied in a data‐poor context. Using Chile's private health insurance market as case study, we show that modest amount of risk sharing greatly improves fit even in simple demographic‐based risk equalization. Expanding the model's formula to include morbidity‐based adjustors and risk sharing redirects compensations at insurer level and reduces opportunity to engage in profitable risk selection at the group level. Our emphasis on feasibility may make alternatives proposed attractive to countries facing data‐availability constraints.

The Impact of Means‐Tested Premium Rebates and Tax Penalties on the Demand for Private Hospital Cover in Australia*

Many governments intervene in private health insurance markets to incentivise demand, balance efficiency and equity, and counter adverse selection. In the context of rising health‐care costs, this is a complex task, and understanding the relative effectiveness of interventions can help governments design an optimal policy mix. We evaluate the impact of means‐testing a premium rebate and increasing an income tax penalty rate on private health insurance hospital coverage in Australia. We employ difference‐in‐difference (DID) analysis on a Household Income and Labour Dynamics in Australia (HILDA) survey panel of 6,179 individuals. To construct a valid control group, we employ income band restriction and match individuals below the policy income threshold to the treatment group using entropy balancing on pre‐treatment covariates and trends. Our analyses suggest that Australia’s Fairer Private Health Insurance Incentives (FPHII) reform in 2012 increased the probability of holding hospital cover by 1.5 percentage points (P < 0.1). The effect was driven by a significant increase in coverage of 2.4 percentage points (P < 0.1) for those in the highest income tier, despite this group experiencing the largest premium increase from the reform. Estimates were relatively robust to sensitivity analyses, including removing those with complicated income streams and removing potential income shifters. Our results suggest that increased tax penalty rates had a stronger impact than means‐testing premium rebates, most likely due to the low price elasticity of private health insurance demand in Australia. We discuss these findings in the context of developing an effective policy mix to attract and maintain private health insurance members and promote private health insurance market sustainability.

Socio-Economic and Macro-Financial Determinants and Spatial Effects on European Private Health Insurance Markets

There is a great variation in the development of private health insurance (PHI) between European countries. Using data provided by Insurance Europe, World Bank and Standard and Poor's for 30 European countries, our research investigates the main factors influencing the size of these markets. In addition to some classical economic and social factors, the role of the size of national macrofinancial aggregates is also highlighted. In order to relax the constraints due to the multicollinearity phenomenon, we use as explanatory variables aggregated indicators, both calculated by financial institutions and by us, based on component items, used as proxy variables for different components of the financial system at national level. Using cross-section regressions with White corrections for heteroskedasticity and elements of spatial econometrics, we also analyze the possible phenomena of clustering and behavioural contagion between the countries in the sample.

Some Insurers Working to Encourage Psychiatrists to Join Their Networks

Some Insurers Working to Encourage Psychiatrists to Join Their Networks

Psychiatrist Participation in Private Health Insurance Markets: Paucity in the Land of Plenty.

Access to specialty mental health care may be poor because many psychiatrists do not accept health insurance reimbursement, whereas many patients rely on insurance to help pay for care. The objective of this study was to examine the extent of participation in private insurance by licensed psychiatrists. Using 2013 Massachusetts licensing data and the All-Payer Claims Database (APCD), the authors performed a cross-sectional analysis of licensed psychiatrists in Massachusetts. The fraction of psychiatrists who filed insurance claims, number of unique patients with insurance claims per psychiatrist, and physician characteristics associated with insurance participation were evaluated. In 2013, Massachusetts had 2,348 licensed psychiatrists. Overall, 79% (N=1,843) had at least one paid claim for an outpatient visit in the APCD, but only 6% (N=151) had claims for at least 300 patients per year (a full caseload). Psychiatrists had a median of 18 patients with claims (mean=73). Compared with psychiatrists 30-39 years since medical school graduation, those within 19 years since graduation were less likely to bill for an outpatient (7-19 years, odds ratio [OR]=0.67, 95% confidence interval [CI]=0.47-0.94) and less likely to have claims for ≥300 patients per year (7-19 years, OR=0.49, 95% CI=0.29-0.83). Participation varied across insurance types (93% for group commercial plans versus 33% for Medicaid managed care plans). Among Massachusetts psychiatrists, participation in the private insurance market appears to be limited. Older psychiatrists are more likely to participate, and patients' access to psychiatrists who accept insurance could worsen as these psychiatrists retire.

The Compatibility of Private Health Insurance Schemes with EU Law: Applying the Health Insurance Exception beyond Substitutive Private Health Insurance

AbstractThe lack of clarity as to the scope of the health insurance exception enshrined in Article 206 of the Solvency II Directive has created uncertainties surrounding the implications for government intervention in the private health insurance market. A contentious interpretation of the health insurance exception, offered by former EU Commissioner Bolkestein, and the approach subsequently taken by the Commission and the Court of Justice of the European Union in assessing the compatibility of Member State intervention in private health insurance have led to a divergence in the application of EU law, which further increases uncertainties around the legality of Member State intervention. This article proposes an alternative interpretation of the health insurance exception that draws on a contemporary understanding of private health insurance as a socio-economic institution aimed at achieving a highly competitive social market economy. This alternative interpretation extends the applicability of the health insurance exception from substitutive private health insurance to complementary private health insurance that covers statutory user charges and thus improves the compliance of national health insurance systems in several Member States with EU law and enhances the coherence of EU law.

The introduction of lifetime community rating in the Irish private health insurance market: Effects on coverage and plan choice.

In response to declining insurance coverage and adverse selection, in May 2015, Ireland introduced lifetime community rating (LCR) of health insurance premiums to encourage take-up of health insurance at younger ages. LCR requires that late-entry premium loadings be applied to those, aged 35 and over, taking out health insurance for the first time. This analysis exploits quasi-experimental difference-in-differences methods to estimate the effect of LCR regulations on insurance take-up, controlling for potentially confounding factors. Findings reveal that the introduction of LCR increased coverage rates for those aged 35-69 by approximately 2.5 percentage points (p<0.01). However, the impact on coverage was largely concentrated in the 35-54 age cohort. Relative to underlying plan coverage rates, take-up was proportionately greatest for low-cover plans. Ireland is the second country to introduce late-entry premium loadings to its voluntary health insurance market, following Australia in 2000. This analysis adds to the current evidence base and improves understanding of consumer response to these regulations. The introduction of LCR has encouraged insurance take-up by those who may have otherwise postponed take-up to older ages contributing to a reversal in declining overall coverage trends, at least initially. However, the purchase of cheaper plans by relatively younger consumers could be contributing to risk segmentation within the market. Moreover, these cheaper insurance plans tend to offer limited benefits and consumers may still face significant out-of-pocket costs to access private care.

Lock-in in Dynamic Health Insurance Contracts: Evidence from Chile

Long-term health insurance contracts have the potential to efficiently insure against reclassification risk, but at the expense of other limitations like provider lock-in. This paper empirically investigates the workings of long-term contracts which are subject to this trade-off. Individuals are shielded against premium increases and coverage denial as long as they stay with their initial contract, but those that become higher risk are subject to premium increases or coverage denials upon switching, potentially leaving them locked-in with their original network of providers. I provide the first empirical evidence on the importance of this phenomenon using administrative panel data from the universe of the private health insurance market in Chile, where competing insurers offer long term contracts. I fit a structural model to yearly plan choices, and am able to jointly estimate evolving preferences for different insurance companies and supply-side underwriting in the form of premium risk-rating and coverage denial. To quantify the welfare effects of lock-in, I compare simulated choices under the current rules to those in a counterfactual scenario with no underwriting. The results show that consumers would be willing to pay around 13 percent more in yearly premiums to avoid lock-in. Finally, I study a counterfactual scenario where long-term contracts are replaced with community-rated spot contracts, and I find only minor general-equilibrium effects on premiums and on the allocation of individuals across insurers. I argue that these small effects are the result of large levels of preference heterogeneity uncorrelated to risk.

MRI for clinically suspected prostate cancer-the disparity between private and public sectors.

There is increasing evidence to implement multiparametric magnetic resonance imaging (mpMRI) for biopsy-naive men with clinically suspected prostate cancer (PCa). This will reduce the number of unnecessary trans rectal ultrasound biopsies (TRUS-Bx) performed and reduce the number of indolent cancers diagnosed. To assess current clinical practices for investigating clinically suspected prostate cancer in Ireland and determine if private health insurance providers are offering mpMRI scans in biopsy-naive men. Each health insurance provider procedure code was reviewed. The indications and requirements for prostate mpMRI in the setting of diagnosis, staging, surveillance, and recurrence were assessed for each health care provider. Current practices adopted by accredited referral clinics for suspected prostate cancer were reviewed. Two of the three leading health insurance providers, which between them cover 46% of the private health insurance market in Ireland, provide pre-biopsy mpMRI cover as of April 2019. This leaves almost half of those insured with no accessibility to pre-biopsy mpMRI. This is in contrast to the majority of public NCCP hospitals that offer pre-biopsy mpMRI for clinically suspected prostate cancer. Pre-biopsy mpMRI for clinically suspected prostate cancer is emerging as a standard of practice in Ireland. International guidelines are also changing to reflect latest clinical trial evidence. Private health insurance providers should amend their policies to reflect current clinical practices already adopted in the public sector.

Selection bias and moral hazard in the Australian private health insurance market: Evidence from the Queensland skin cancer database

This study estimates the effects of moral hazard and selection bias in private insurance by exploiting the unique characteristics of private health insurance in Australia using a longitudinal data of about 37,000 individuals. We estimate determinants of private health insurance status and health service consumption together as a system to control for individual unobserved effects. We also take into account the evolution of the health production process by controlling for the lagged dependent variables. We found that risk-averse individuals were more likely to purchase private health insurance, suggesting an advantageous selection. There is also evidence of ex-post moral hazard as privately insured individuals consumed more health services. Controlling for the lagged health service consumption reduces the magnitude of moral hazard considerably. The presence of advantageous selection and moral hazard in private health insurance indicates that the Australian healthcare system can be more efficient by increasing coverage and monitoring consumption.

Poster 6 - MRI for clinically suspected prostate cancer – the disparity between private and public sectors

There is increasing evidence to implement multiparametric magnetic resonance imaging (mpMRI) for biopsy-naive men with clinically suspected prostate cancer (PCa). This will reduce the number of unnecessary trans rectal ultrasound biopsies (TRUS-Bx) performed and reduce the number of indolent cancers diagnosed. To assess current clinical practices for investigating clinically suspected prostate cancer in Ireland and determine if private health insurance providers are offering mpMRI scans in biopsy-naive men. Each health insurance provider procedure code was reviewed. The indications and requirements for prostate mpMRI in the setting of diagnosis, staging, surveillance, and recurrence were assessed for each health care provider. Current practices adopted by accredited referral clinics for suspected prostate cancer were reviewed. Two of the three leading health insurance providers, which between them cover 46% of the private health insurance market in Ireland, provide pre-biopsy mpMRI cover as of April 2019. This leaves almost half of those insured with no accessibility to pre-biopsy mpMRI. This is in contrast to the majority of public NCCP hospitals that offer pre-biopsy mpMRI for clinically suspected prostate cancer. Pre-biopsy mpMRI for clinically suspected prostate cancer is emerging as a standard of practice in Ireland. International guidelines are also changing to reflect latest clinical trial evidence. Private health insurance providers should amend their policies to reflect current clinical practices already adopted in the public sector.

PHP178 - ROLE OF SUPPLEMENTARY AND COMPLEMENTARY PRIVATE HEALTH INSURANCE IN SELECTED COUNTRIES

The Egyptian government is planning to extend universal health coverage (UHC) for the whole population. Private health insurance (PHI) can support this initiative, in the form of providing complementary (CompHI) and supplementary health insurance (SuppHI) in addition to the public health insurance scheme. This study aims to give an overview of the possible roles of PHI to support the extension of UHC. Countries having CompHI or SuppHI systems and sharing some characteristics with the Egyptian health care system were selected. A targeted literature review was conducted and results of the review were discussed with experts and stakeholders from the field of health insurance. Portugal, Hungary, Netherlands, Turkey and South Africa provided valuable information with regards to i) types of coverage and benefits, ii) regulatory and financing techniques, iii) types of incentives and iv) direct and indirect regulatory tools to manage the private health insurance market. We found that the scope of SuppHI and CompHI was strongly influenced by the regulatory and policy context of the selected countries. Development of UHC in Egypt should be carried out together with CompHI and SuppHI. The mid-term and long-term policy framework to adjust the role of private health insurance to UHC via political, direct and indirect financial objectives should be determined. Pilot disease and therapeutic areas to provide CompHI and SuppHI should be selected to facilitate alignment on the short run.