initial analysis of universal health insurance 24 march 2011
TRANSCRIPT
“UHI”
• What is it?
• Compulsory private health insurance, with a ‘public option’
• Social insurance , like PRSI
• A mix of both…
• Both underpinned by existing taxation – how much?
• A market or a social scheme?
• Equal, always-on, 24/7, free care?
• Universal health care
• A lot of work… people, processes and projects
People• Minister for Health – keen to get on with it• Minister for Finance – keen to reduce deficit• 2.1 million insured – keep it, low cost• 2.3 million not insured – services, fairness, cost• 2,400 consultants – decisions, power, earnings• 2,500 GPs – salary, fees, support• 100,000 other public servants• 38-52 acute public hospitals – status, roles, funding, accountability• 19 private hospitals – roles, pricing• 3 insurers, maybe more – costs, profits• EU Commission – keep the rules• EU/IMF oversight
• Health Acts, 1970-2005 • Health Insurance Acts 1994-2009• VHI Acts 1996-2008 • Minimum Benefits Regulations 1996 –• Statutory hospitals instruments – for all hospitals• Competition Acts• Finance Act• Risk equalisation scheme• EU Competition Directorate• EU Single Market Directorate• Employment contracts consultants, GPs, other
• Economic and cost rationale• Goals clarity• Clarity for public entitlements• Sequencing clarity• Government approval• Policy directions for primary
legislation• Write primary legislation• Secure EU agreement• Publish, consult, debate, amend,
enact• Secondary legislation: draft,
publish, consult, finalise• New purchasing public agency –
establishment, staffing, governance, administration
• VHI capitalisation and authorisation
• Negotiate contractual changes for doctors and others
• Set pricing policies• Tax / premium mix• Cost control mechanism• Board for every hospital• Set and administer payment
mechanisms• Ensure administrative interface
with the public• Go live
Basics – providing and paying
• Simplified diagram
Individuals Providers Intermediaries
Resources
Services
Slightly less basic
Govt HSEGeneral taxation Annual budget Salaries, grants
Insurers Fees, charges
Govt usage charges
Direct out of pocket fees
Insurance policy premia
Tax relief
Is this the new world?
GovtGeneral taxationSalaries, grants, capitation
State VHI + Commercial Insurers
Fees, charges
Direct out of pocket fees?
Compulsory premia
Health Insurance Fund
Top-up premia
Or will this actually happen?
General taxation
Salaries, grants, capitation
Fees, charges
Pay-related premia
Govt
“State Fund /VHI”
Or this?
General taxation Salaries, grants, capitation
Fees, charges
Pay-related premia
Fees, chargesVoluntary premia
Govt
“Lesser VHI”
Commercial insurers
Are we forgetting…
THIS?
• Services• Quality, development• Primary-acute integration• How does the financial
channel design impact?• No dominant best way
Justify complexity
• Everything should be made as simple as possible, but not simpler (Einstein)
• What does the arrangement of financial ‘intermediation’ achieve?
• It’s large scale change
Large scale change
• “Evidence from health system reform in other countries suggests that, in general, it is better to avoid major re-organisations of structures … and to focus instead on changes in the mechanisms and incentives within existing structures”Report of the Resource Allocation Group, Chapter 2.2.1
“A White Paper on Financing UHI will be published early in the Government’s first term and will review cost-effective pricing and funding mechanisms for care and care to be covered under UHI”Government for National Recovery 2011-16
Design Choices
• Stated objectives vs probable outcomes
• Fundamental choices to be made
• Unavoidable realities
What does it mean to …
• People / patients
• Providers – hospitals, primary care
• Insurers
• Government / taxpayers
People
• What benefits do I get?
• By virtue of - public law or enforceable contract?
• How much do I pay? More or less than now?
• Different answers for different people – some will pay more, who?
• What choices do I have? Of provider? Of intermediary? Of how much I pay? Of what I get?
• Competence, choice, respect: trust
Providers
• ‘Any willing provider’ – great idea, but much detail needed
• Contracts for services – but acceptance of limits, undertakings outside service
• Pricing and product design freedom
• Who pays them? One pool?
• State implicit underwriting for public providers –fair competition? Subsidies for whom?
• UK Monitor-type role needed
Providers
• “Public” hospitals – all becoming n-f-p trusts– Ownership of assets– Accountability: who appoints/dismisses board/ceo– Financial failure – underwriting – local politics?
• Private hospitals– Free to enter, to price, to design services?– Anything beyond ‘basic package’– Consultant staff – public contract holders?– Profitability/viability– Competition and fair playing field
Providers
• Primary care providers
– GPs and all - salaried state employees?
– PC centres – how many, how big, no HSE
• same issues for public hospitals: management, competence, accountability, financial management
• Private primary care/other services
– Who pays? What rate? Freedom to enter?
– Contracting out – no reason why not
Insurers
• Why engage?
• Make profit: benefit design, customer selection, cost control, pricing: profit
• Is it a fair market?– VHI ‘dominance’, authorisation and capitalisation
– Function as a State-mandated ‘public option’
– What type of Risk Equalisation?
• Is it a market at all?– Competing insurers without competition law…
Competition law
• Critical issue for commercial insurers and providers.
• German case cited (AOK 2004)
• The concept of an undertaking in Community competition law does not cover bodies entrusted with the management of statutory health insurance and old-age insurance schemes which pursue an exclusively social objective and do not engage in economic activity
• Unattractive to commercial insurers – policy choice
Government - taxpayers
• Money limit – even in good times
• Unlimited activity = great benefit = unlimited cost = unlimited taxation/premia
• New benefits = new cost
• New cost = new tax or redistribution from current beneficiaries. Is enough available?
• Cost control necessary: how?
• Budget limited money will follow the patient
• Solvency (and reserves) of insurance entities necessary
• Annual budgets here to stay
Government - taxpayers
• Money limit – in tough times• Public expenditure savings and limits• New insurance premia - collection via payroll• No increase in income tax rates, bands or
thresholds?• EU competitiveness pact – move away from
labour taxes• Critical issue of VHI derogation/authorisation• Capitalisation of VHI – 100-300m – EU/IMF
compatible? Prudent investor? Competition?
Conclusions• Immensely complex: take do-able steps in careful sequence• Worth addressing primary care – but with no role for insurers?• Worth improving equality in publicly-funded services• Worth providing clarity on entitlements and service commitments• Worth using all capacity for public patients by purchasing• White Paper has task cut out• Provide clarity fast. Without it, commercial insurers will stay wary• No market without players; no willing providers without
commercial benefit• Forget comparisons with Dutch, German, French, US, etc. • Build solutions and improvements for Ireland • For patients: important still to focus on constant improvement in
services, cost, outcomes – and choice, respect, trust