Transcript The role of Cadenza Project in response to these findings

HEALTH INSURANCE
FOR OLDER POPULATION
Objectives
1. What can we learn from the previous
health finance reform experience?
2. What are the major concerns of older
health insured?
3. Health care insurance will alter the
relationship between providers and
patients, how?
Health Finance Reforms
Hong Kong (1993 – 2008)
Healthcare Finance Reforms in HK
(1993 – 2008)
Towards Better Health
1993
The Harvard Report
1997
Lifelong Investment in Health
2000
Building a Healthy Tomorrow
2005
Your Health, Your Life
2008
Media Responses towards
Health Finance Options
(March 13 – June 18, 2008)
Po sitiv e
Ne u tra l
Ne g a tiv e
G eneral
P ers onal H ealth Res erve
M andatory H ealth Ins urance
V oluntary H ealth Ins urance
M edical S aving A ccounts
O ut of P ocket
S ocial H ealth Ins urance
0
5
10
15
20
# of responses
25
30
35
What are HK people concerned about?
Mean
9.0
7.7
7.6
7.5
7.4
7.0
6.7
Indulging
them selves
Career
6.6
Ma rks 9-10
Ma rks 6-8
Ma rks 1-5
Health
Saving m oney
Financial
situation
during
retirem ent
Reducing
financial
burden
Ensuring
children's
future
Hom e
ow nership
Benchmark – Personal Finance in Asia, Sept 2008, p65
Are People Willing to Cost Sharing?
Yes, thus:
• 38.5% had medical insurance provided by
employers. (HK Government Survey, 2006)
• 65% owned at least one health, medical or
hospitalization insurance plan; 43% of
these people with critical illness coverage.
(AXA Protection Survey, 2007)
• 20% owned both employer and personal
medical insurance. (AXA Protection Survey, 2007)
Why Futile?
• Lower income: had problems to make
ends meet, any increase in contribution,
will further reduce their take home pay.
• Middle and high income: had already
made a major tax contribution, they do not
want to make any increase in contribution
without any promise of getting better
service or more choice in return.
“Development and Financing of HK’s Future Health Care”
by The Bauhinia Foundation Research Centre, Health Care Study Group, 2007
Desired Features of a
Health Care Product
Hospital care,
primary & prevention
care, long term care
• Regulator
• Provider
• Insurer
No one will be denied
medical care because
of age, pre-existing
health conditions
& means)
Allow people to
change
insurer/providers
without penalty, and/
or seek medical care
in Mainland China
Obtain the service at
the right time and at
the right location
Comprehensiveness, Universality
Portability and Accessibility of
Public Health Insurance:
Canada’s Experience
The Canada Health Act (1984)
• Aim: To protect, promote and restore the physical
and mental well being of residents of Canada and
to facilitate reasonable access to health Services
without financial or other barriers. (Section 3)
• Five Principles
–
–
–
–
–
Public Administration
Comprehensiveness
Universality
Portability
Accessibility
Test of Comprehensiveness
• Originally, = comprehensive coverage of
all hospital services
• Today, = medically necessary (and non
experiment) service.
• Political debate, = “government
commitment”, “all encompassing care” and
“right to health insurance, but not right to
health care”.
At least, we need to know
1. What will the health plan coverage?
2. Will it be universal and accessible
regardless of age and pre-conditions?
3. Will the health insurance plan portable?
Before we make a fiscal commitment.
Health Insurance for
Older Person
Nature of Insurance
and Health Insurance
• To balance individual random risk with
a large number of insured population.
• Health insurance
– Medical events may be unpredictable, but the overall
risk is predictable
– Covering random, infrequent and costly health
problems beyond one’s control
– Ensures availability of money for unexpected medical
expenses
Insurance Company’s Strategies
in reducing their risks
• Medical underwriting: to screen out applicants
who are too risky to be accepted. Risk selection
– Don’t insure pre-existing conditions e.g., mental
health, congenital illnesses
– Drop those who get major illness e.g., heart disease
• Charge them with a higher premium
– Premium increases significantly with age and people
with pre-existing conditions
• Greatly increase co-payment
Very Difficult for Older Persons to be insured
The Older = Risky Population
• 65 years made up 14% of BC population
–
–
–
–
47% acute care services
49% of PharmaCare expenditure
71% of home and community care
93% of residential care services
• Compare to 70 years old persons, a typical 85
years old persons use
– 3 times more acute care services
– 12 times more community services
– 25 times more residential care services
Ministry of Health 2006/07 Annual Service Plan Report, BC, Canada
Catastrophic Events are Rare but Expensive
% Out of Pocket Health Care Expenditure in USA
95%
Routine
5%
Average
Expense
(US$)
Catastrophic
42%
$49,285
2014
58%
$3,588
52%
2005
$33,607
48%
0
10
20
30
40
$1,658
50
60
70
Centers for Medicare and Medicaid Services (CMS) national health care expenditure;
University of Michigan 2002 Health and Retirement Survey, McKinsey analysis.`
% of respondents with an option of
choosing an insurance
People Feel Prepared in USA
48%
50
45
40
35
30
25
20
15
10
5
0 Commom Medical
Problem
65+
28%
49%
22%
20%
20%
48%
15%
Chronic
Condition
Major Accident Disabled, Inability
to Work
Major Medical
Event
Impairment
requiring Long
Term Care
The McKinsey Quarterly, June, 2008
Routine – Adequate Coverage?
Projected 2014 out-of-pocket health care expenses by US retirees by service
category (Nov 2005, McKinsey on Health)
Nursing Hom e
1%
Others
16% (hospice, professional services)
Hospital
6%
Physician
7%
Drug
55%
Dental
15%
Catastrophic – Adequate Coverage?
Projected 2014 out-of-pocket health care expenses by US retirees by service category
(Nov 2005, McKinsey on Health)
Drug
17%
Dental
4%
Nursing Hom e
43%
Physician
2%
Hospital
8%
Others (hospice, professional services)
26%
Sufficient Amount?
• You buy at age 20, the benefit you
accumulate will at age 65 = HK$300,000
– 2% employee and 2% employer contribution
• $300,000 = 10 days stay in a private
hospital with medical care and ($10,000 per
day) + 12 months stay in a decent private
nursing home ($15,000 per month).
Benchmark – Personal Finance in Asia, Sept 2008, p60
Long Term Care Insurance:
the Japan’s Case
Health Care Insurance in Japan
• NHI (National Health Insurance by all levels of
government) covers self employed and elderly –
36%.
• EHI (Employees Health Insurance) 56%
– GMHI (Government-Managed Health Insurance by
Ministry of Health, Labor & Welfare) covers small and
medium size companies’ employees 30%
– SMHI (Society-Managed Health Insurance) covers
large companies’ employees – 26%
• Civil Servant and Teachers – 8%
Long Term Care Insurance in Japan - 2000
• Welfare service program + Health service
system for the Elderly
• 2000, Long Term Care Insurance – at home and
institution services
– Type 1 (65+)
Long Term Care
Certification required
– Type 2 (40 – 64)
for people with 15 specific diseases (dementia etc.)
• Financed by taxes (51%), LTCI contribution*
(37%) and copayment (12%)
* 1% of pension from elderly pension; 1% of health insurance from younger population
Public Social Health Insurance Act
and
Exceptional Medical Expenses Act
the Netherlands’ Case
The Health Insurance Act
• Regardless the age or health status of a resident,
a private insurer:
– cannot refuse to cover him/her for the basic insurance
plan
– has to charge everyone joining the basic plan the
same rate of premium (approx. 1,050 euro per year)
• Residents can switch to another private insurer
after a year
• Citizens under 18 pay no premium
Exceptional Medical Expenses Act
•
•
•
•
•
•
Paid through Tax.
Rate is income related (13.45% in 2005).
Eligibility is determined by CIZ.
Benefit can be in kind or in cash.
Copayment is mostly required.
Benefits cover home care, residential care
homes, nursing homes, hospital and
rehabilitation (normally after the stay paid by
HIA – 365 days).
Financing of HIA
Health
Insurance Board
Pay insurers for children’s
premiums and to compensate for
financial disadvantage in insuring
high risk individuals
Excessive health expenses
Beyond Health Insurance
Healthcare Relationship Map
Ultimate Source
of Funds
Original Source
of Funds
Consumers
Patients/
Clients
Employers
Taxpayers
Private
Providers
3rd Party
Payers
Public Providers
(HA, DH, SWD)
Health Care Insurance is a
Complex Business
Disease, illnesses
Major medical event
Accident
Mental illness
Disability
Impairment
Preventive care
Basic care
Treatment of serious condition
Outpatient care
Inpatient care
Pharmaceuticals
Institutional care
End-of-life care
Savings
Investments
Insurance
Longevity Insurance
Reverse Mortgage
Managed Health Care
Ever expanding and innovation driven nature of modern
health care, is like a powerful engine with no brake.
•
•
•
•
•
•
•
Supply and Demand
Discharge planning: length of stay
Case management
Utilization review
Disease management
Medical innovation, technology evaluation
Assessment of provider
Health Care Advice
from Health Insurance Providers
• Health related finance advice
– if they have adequate coverage
– how much they have to pay and what
the plan will cover
• Support in navigating the complex heath care
system especially after a major illness
• Support and guidance in dealing with chronic
conditions
• Preventive health advice
• Treatment advice
Conclusions
1.
2.
3.
We need to know the features of health care
products – comprehensive, accessible, universal
and portable, before we choose a or multiple health
care finance options.
Health insurers will not find the older insured
“profitable”, government funding support to health
care finance for older persons (e.g., long term care
insurance) appears to be the only alternative.
Health care insurance (as 3rd party payer) will
ultimately alter the relationship between health care
providers and receivers. We need to be aware of the
unintended consequences of such changes e.g.,
managed care