Minister for Health, Dr. James Reilly, T.D. Announces Appointment of Independent Chairperson to health insurance forum to secure cost reductions
The Minister for Health Dr. James Reilly, has announced his intention to propose the appointment of an Independent Chairperson to the Consultative Forum on Health Insurance to work with insurance companies and the Department of Health to effect real cost reductions in the private health insurance market. This is in keeping with the Minister’s consistent calls for private health insurers to address the high costs and affordability in the private health insurance market.
To date, private health insurers have been enjoying a significant subsidy, where private patients in public beds have only paid a standard €75 charge per night, while those in private beds pay up to €1,000 per night. The effective subsidy amounts to at least €200m. In real terms this equates to the cost of treating some 30,000 patients annually.
Calculation of Increases by Insurers
The likely impact on premiums of the Private Charges legislation has been exaggerated by the insurers. The Minister does not accept their claim that premiums may increase by 30%. The insurers have not explained how this figure is calculated, while the Minister’s actuarial advisers have indicated, following a high level review, that a much lower figure is likely.
The level of claims paid by private health insurers continues to increase year on year. Between 2004 and 2008, the average cost of claims paid (prescribed benefit) per insured person increased by 6.7% per annum. Between 2008 and 2012 this increase rose to 12.6% per annum. Such increases have clear implications for the long term sustainability of the private health insurance market. The Minister does not accept that such claims increases are sustainable in a time of general deflation and private and public sector pay cost reductions.
The knock on effect of claims increases is that it increases premium costs for consumers. This is of deep concern to the Minister. Premium costs have been increasing steadily over the past ten years, in particular since 2008. In 2008 the average premium paid by each insured person was €728.80. In 2012 this had risen to €1047.71, representing a 44% increase in the 2008 to 2012 period.
As a way forward, the Minister is writing to the Chair of the Health insurance Council to propose a mechanism for giving urgent attention to the issue of costs. Commenting on his proposal the Minister said “I will be appointing an independent Chair as part of the Consultative Forum on Health Insurance to oversee a process of review of the following areas to give effect to real cost reductions in the private health insurance market; utilisation management, the development of clinical audit as a tool to ensure appropriate care, provider reviews, and the continued transition of procedures to lower cost medically appropriate settings. I am strongly of the view that all procedures should be provided at an appropriate setting that’s safe and provides value for money for the customer and I acknowledge the efforts made by insurers to perform more treatment on a day case basis.”
The Minister will shortly appoint the independent Chair and will request a short timeframe for the process and conclusion of discussions on cost reductions.
In conclusion the Minister said “I am calling on insurers to respond positively to the challenges of ensuring that private health insurance is maintained as a viable business in the lead in to UHI”.