Health insurers should not have to cover all public hospitals, new report urges

Health insurers should not be obliged to provide cover for all public hospitals, a new report to be launched today by Minister for Health Leo Varadkar will recommend.

The report on potential cost-saving measures in the industry drawn up by former health board chief Pat McLoughlin says that while it is important that they meet the needs of their customers within a reasonable geographic area, insurers should not be required to cover every public hospital.

It says health insurers should not feel obliged to provide cover for existing or new private facilities and they should negotiate more aggressively for their patients consistent with quality and cost considerations.

It also recommends that an immediate priority should be the establishment of a joint initiative for an integrated model of care for the treatment of chronic disease.

The report reveals that according to data provided by the industry regulator, the Health Insurance Authority, the average cost of claims paid per insured person fell by 2 per cent between 2012 and 2013. This is the first recorded fall in these costs in many years.

New trend

However, it says that further data will be required in order to determine whether reduced claims paid in 2013 are part of a new trend.

In his report Mr McLoughlin says he is more positive about the future of the health insurance industry than when the current review process started a year or so ago.

“At the commencement of this process twelve months ago, there were legitimate concerns regarding the sustainability of the Irish community-rated private health insurance market due to a combination of factors.

Issues

“The issues causing concern included the reduction in numbers holding private health insurance, the age of those holding private health insurance, unsustainable increases in claim costs, unsustainable increases in premiums and the overall economic climate.”

“Over the past year there have been some signs of a more stable economic environment emerging. The decision of the Minister for Health to introduce lifetime community rating from 1 May 2015 will hopefully lead to an improved age structure in the insured market by encouraging people to take out private health insurance at a younger age and thereby controlling premium inflation across the market. This in turn should help to keep rates of premium competitive and affordable.”

The report says it is clear that insurers have put more resources and effort into clinical audit, utilisation reviews and challenging of claims, “which may already be having an impact”.

It says there is a prospect of efficiencies arising from the decision to move towards product pricing in public hospitals – away from the per diem charge to a price based on the actual cost of treating different types of case.