Private Medical Insurance UK vs Republic of Ireland Sue Cross AXA PPP healthcare UK Aongus Loughlin Mercer HR Consulting Ireland George Orros Universal Health Consultants Moderator UK vs Ireland

Irish Healthcare System System provides free access to all citizens based on ability to pay according to income. Category I (Means tested & income limit ranges from €6,396-€11,648. All persons over 70 eligible irrespective of income. Approx. 34% of population) Category II (remainder of population). Funded from general taxation

Ireland – Key features of PMI Voluntary “private” insurance Policyholder retains right to use public system No reduction in tax/social insurance contributions State provides tax relief on full premium @ 20% currently Market heavily regulated Community Rating Open enrolment Lifetime Cover Minimum benefits Risk Equalisation

Ireland - Community Rating vs Risk Rating Source: Dept of Health & Children

Ireland -Typical PMI Cover In-Patient/Day care treatment Full cover (Max 180 days per year) No exclusion of chronic conditions Out-Patient specialist consultations/investigations Limited cover (subject to per item limits & large aggregate annual excess) Primary Care Drugs (Out-Patient) No cover Cost of most popular PMI coverage in Ireland Adult = €583 Child = €212

Ireland - Regulatory framework Voluntary Health insurance Act, 1957 Health Insurance Act, 1994 (Community rating, Open enrolment & Lifetime cover) Health Insurance (Amendment) Act, 2001 Health Insurance Authority established February 2001 to determine whether risk equalisation is necessary and oversee PMI system in Ireland Risk Equalisation Scheme introduced 1st July 2003 Introduction of “lifetime” or “age adjusted” community rating – insurers can charge additional premium loadings to those joining at age 35 or over

Ireland - Critical issues Potential introduction of risk equalisation – currently being considered. Two opposing sides and opinions! Intent to move towards charging “full economic cost” for private beds in public hospitals Government intent to reduce waiting lists and National Treatment Purchase Fund. Market demand for primary care/out-patient cover Growing demand for Healthcare Cash Plans

UK - Public health system National health service (NHS) is funded from general taxation Provides in patient, out patient and primary care free of charge Co-payment on primary care prescriptions

UK - Key features of PMI Indemnity based product Private medical treatment for acute conditions Predominantly excludes pre-existing conditions Voluntary private insurance - retain right to full use of public system No tax incentive for Individuals to purchase PMI

UK - PMI Typical cover Treatments Cover Exclusions In patient/ day case Full refund Chronic (includes drugs) conditions and A&E Out patient Cover varies Annual benefit limit Primary care Not covered Outpatient drugs Not covered Product variants: Annual excess, NCD, waiting list plans Average annual premium per subscriber( Laing & Buisson 2002) Total: £773 Individual: £1,161 Company paid: £586

UK - Government impact on PMI Free market - little regulation currently No personal income tax relief Insurance premium tax (IPT) - 5% of premium Company paid premiums are taxed as a benefit in kind Companies can offset the cost of PMI for tax purposes but cost is subject to employer N.I. charge

UK - Critical issues Grow the individual market Medical expense inflation Take advantage of public policy decisions Affordability Product innovation

UK vs Ireland Numbers insured

Ireland PMI Number insured vs population Source: White Paper Private Health Insurance 1999, HIA Annual Report 2002 & independently sourced information from CSO, VHI, BUPA and a number of Restricted Undertakings.

UK - PMI Subscribers Corporate vs Individual

OECD Health Data – UK vs Ireland

Why purchase PMI Choice (specialist/hospital) Comfort ( private room) Convenience (time of treatment) Access ( speed of treatment) In-patient waiting lists: UK : 1,000,000 approx (2% of population) Ireland : 18,500 approx (0.45% of population)

Key Similarities Aims of PMI Secondary care provided by public health system High medical expense inflation Public policy decisions

Key differences Significant political support in Ireland Regulation Product pricing and design restricted in Ireland ( community rating, open enrolment, lifetime cover, minimum benefits) Risk equalisation in Ireland Tax incentives Primary care provision Market growth Affordability Product exclusions

What can be learnt? For UK (political context is key) For Ireland