Insurance HQ Commentary on the World Health Insurance Slump

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There has been a world wide health insurance slump. More people than ever before are not covered with by Health schemes both in private and public sectors. Australia is having its own health insurance problems with the Prime Minister Kevin Rudd's Government's new Health Policy imperatives. Insurance HQ predicts 913,000 Australians will drop their insurance because of changes to the tax system.

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The Minister for Health, Nicola Roxon, has announced that private health insurance premiums will go up by 5% on average, in August 2008. The actual increase you will pay depends on your fund, policy and the state you live in. Some policy conditions and features may also change.

Bruce Gow, director of Insurance HQ, would like to see companies with more than 1,000 employees to spend at least 9 percent of their payrolls on health benefits.

Those that pay less than 9 percent could be required to pay the difference to the state. (contact details of Insurance HQ at bottom of this release)

Insurance firms should have more flexibility to offer reduced-benefit plans or plans tailored to low-risk young adults. This would mean that young adults could buy insurance with low premiums but high deductibles. Research has shown that there is a World Wide Health Insurance slump.

In its first health insurance and system findings from over two years ago, The Commonwealth Fund Commission (see on a High Performance Health System found that the United States fell far short of benchmarks for access, quality, efficiency, and other key measures of health system performance.

Recently the U.S. scored a lowly average of 65 out of a possible 100 across 37 indicators.

The upcoming presidential election in November this year will need to place health reform as a major policy as an estimated 50 million U.S. citizens have no health insurance.

Australia is having its own health insurance problems with Prime Minister Kevin Rudd Government's new Health Policy imperatives.

Take, for example, the doubling of the Medicare levy surcharge announced in the May 2008 Budget.

The Rudd Government has increased the threshold for payment of the one per cent tax levy for singles from $50,000 to $100,000 and for couples from $100,000 to $150,000.

This is starting to place more pressure on public hospitals as the uninsured flood in.

The flow-on impact of allowing hundreds of thousands of people to flee private health insurance as it gets more and more unaffordable to average wage Australians.

The public health system in Australia is called Medicare. It ensures free universal access to hospital treatment and subsidised out-of-hospital medical treatment. It is funded by a 1.5% tax levy.

The private health system is funded by a number of private health insurance organisations. The largest of these is Medibank Private, which is government-owned, but operates as a government business enterprise under the same regulatory regime as all other registered private health funds.

The Coalition Howard government had announced that Medibank would be privatised if it won the 2007 election, however they were defeated by the Australian Labor Party under Kevin Rudd which had already pledged that it would remain in government ownership.

Some private health insurers are 'for profit' enterprises, and some are non-profit organizations such as HCF Health Insurance. Some have membership restricted to particular groups, but the majority have open membership.

N.B. Most aspects of private health insurance in Australia are regulated by the Private Health Insurance Act 2007.

The day after the last Budget was delivered the Australian Federal Government confirmed Treasury's "assumption" that about 484,000 people would dump their private cover, saving Federal outlays in the order of $960 million over four years in the 30 per cent private health insurance rebate but resulting in a net saving of about $300 million once you took into consideration the $660 million lost from the uninsured who paid the one per cent tax levy.

More than 25 years after the introduction of private health insurance (PHI) in developing countries, there is still no evidence that it can benefit more than a limited group of people.

In low-income countries coverage rates are generally less than 10 per cent of the population.

In countries where PHI has shown a strong growth, its contribution to universal access to health care has been insignificant or has even had an adverse impact by increasing inequalities. Many people are now seeing investment advice

In Chile, premiums were set 2.5 times higher for women than for men.
The costs of regulating PHI and the fragmentation of risk pools make this an inefficient and expensive way of improving health access.

In some countries there have been more successful health schemes.

In Guatemala, the Association por Salud in the town of Barillas (population 65,000), formed in 1996, offers access to primary healthcare and hospital treatment in emergencies in return for an
annual subscription of approximately €100 per family. It is managed by local figures prominent in civil society.

In Cameroon, the Mutuelle Famille Babouantou de Yaoundé (Yaoundé Babouantou Family Mutual Fund) is intended for members of the Babouantou community. Formed in 1992 as a mutual aid society, it covers major risks on a flat-rate basis in return for a family subscription of less than FCFA 20,000.

In the Philippines, the international NGO Organizing for Educational Resources and Training (ORT) proposes as part of its activities dedicated to protecting mothers and children, health coverage that is fairly wide (primary and secondary healthcare) for a subscription adjusted to match the resources of the target population: the inhabitants of isolated rural villages in the province of La Union. The quite complex management of this system is provided on a professional basis.

In Tanzania, UMASIDA is a mutual association that has been managing a health insurance scheme in workers' cooperatives in the informal sector in Dar es Salaam since 1995. Each cooperative offers its own insurance and UMASIDA manages all or part of this, hospital treatment in particular. The average subscription is in the region of $5 per person per year.

In Ghana, the management of the Nkoranza Catholic Hospital launched a health insurance scheme in the 1990s that covers healthcare provided in the establishment for a subscription of around 1 euro per person per year. The scheme is owned by the hospital, which manages it.

In India, the Self Employed Women's Association (SEWA) is a trade union formed in 1972 for women in the informal sector.

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It conducts a diverse range of programmes in the domain of basic healthcare and mother-child protection. It has launched a health insurance scheme as part of a basket of coverage including other risks which must be taken out as a whole. The scheme, whose coverage is fairly restricted, offers a number of options. It is managed on a participatory and professional basis.

It does seem possible to conclude that there are bright prospects for voluntary insurance in many developing countries. World Health Insurance firms will need to address

If the insurer can segment markets by income, even low income households might be attracted

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Bruce Gow

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