1 Private Health Insurance in the OECD The OECD Health Project Francesca Colombo, OECD Gastain, 7 October

2 Size of PHI markets

3 PHI role depends on the structure of public systems

4

5 PHI not correlated with GDP or its growth Note: y = x R 2 = If the USA is included, R 2 = Source: OECD Health Data 2003.

6 Access to care and coverage PHI creates inequities in utilisation, can give providers incentives to favour private insurees Without intervention, access to PHI can be difficult for low-income/high-risk individuals Useful practices Specify rules of access to care and providers’ duties towards public patients; regulate private sector prices. Regulate issuance, premium rating, high-risk coverage.

7 Responsiveness PHI generally enhances choice (providers, timing of care, benefits, insurer) but choice not always clear Insurers face more incentives to innovate, adopt new technologies Useful practices Disseminate clear comparative information on plans and benefits. Regulate benefits to facilitate consumer choice.

8 Economy PHI added to total health expenditure regardless of its role Little shifting of cost from the public sector (public sector often bears cost of high risks) Useful practices Encourage insurees to use privately financed services. Apply same cost controls to public and private system. Weigh opportunity cost of any subsidies. Avoid full PHI coverage of cost-sharing in statutory/public systems.

9 Efficiency Little management of care by insurers High administrative costs Competition yet to deliver efficiency gains Useful practices Encourage insurers’ involvement in preventative care or care management. Remove disincentives to selective contracting. Design risk equalisation to strike a balance between fair competition and insurers’ efficiency incentives

10 To conclude PHI has enhanced responsiveness Less positive impact on equity and efficiency Performance varies (PHI role; government interventions) Policy makers face trade-offs Useful practices can help

11 More information Working Papers: –Benefits and costs for individuals and health systems –Case studies PHI in OECD Countries (Nov. 2004)

12 Additional graphs if questions

13 Why differences in market size? Historical factors Public policy interventions Role of employers (growing in many countries)

14 Variation in PHI size in countries with serious waiting times

15 Financial protection against out- of-pocket payments varies Source: OECD Health Data Data from 2000

16 Health systems mainly publicly financed Source: OECD Health Data Data from 2000

17 Little variation in public health spending as share of GDP Source: OECD Health Data 2003.

18 PHI and total health expenditure R 2 = 0.43 if U.S. excluded Source: OECD Health Data But countries with either: –High PHI share in THE –High PHI pop. coverage tend to have high per capita health spending (U.S., CH, Germany, France)