HEALTH: FOCUS ON TOMORROW S NEEDS. Date:7 th December Overview of the Irish Healthcare System John O Dwyer CEO, Vhi Group DAC.

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1 HEALTH: FOCUS ON TOMORROW S NEEDS Overview of the Irish Healthcare System John O Dwyer CEO, Vhi Group DAC Date:7 th December 2018

2 Agenda Agenda Irish Economic Landscape Overview of the Irish Healthcare System Challenges Healthcare Reform The Irish Private Health Insurance Market

3 Irish Economic Landscape Economic Indicators Population 4.86M April 2018 GDP 2.5% Q Monthly Unemployment Rate 5.3% Nov 2018 Challenges Housing Health Demographics Brexit

4 Overview of Irish Healthcare System 2018 Budget bn* *26% Total Government expenditure (current & capital). Sources of Health Funding (2015) Government Expenditure: 70% Out of Pocket Expenditure: 15% Voluntary (private) Health Insurance: 15%

5 Public Expenditure per capita USD Luxembourg Norway Switzerland United States Germany Sweden Netherlands Denmark Austria Belgium Ireland EU15 avg France United Kingdom Finland Italy Spain Czech Republic Slovenia Portugal Slovak Republic Estonia Greece Hungary Poland Latvia Government financed health expenditure per capita, Per capita USD PPPs

6 Chronic Disease Challenges: Demographic Changes and Population Health Our Population is Increasing and Ageing Increase in 65+ Population Increase in 85+ Population 95% Increase in Total Population 59% 12% 1in3 Population suffer with some form of Chronic Disease > Responsible for 76% deaths Ireland 30,000 New cases of cancer diagnosed each year > Projected to increase to 40k by % 65+ have a Chronic Disease 1 in 5 exp. mental health problems 1 in 3 People develop cancer in their lifetime Source: HSE Prevention and Management of Chronic Disease & HSE Healthy Ireland 6

7 Total Acute Activity Projections of Future Demand for Healthcare In Ireland, Total Acute Activity Private 19% Inpatient beds Public: 10,592 (2016) Private: 1,907 (2016) Day-case beds Public: 2,140 (2016) Private: 581 (2016) Public 84% Source of Acute Capacity statistics taken from the Acute Hospital Bed Capacity, A National Review 2018 (Dept of Health & Children) Projections for 2030 compared to 2015 levels Public Hospitals Inpatient Bed Days 32-37% Up to 1.20m extra Day Patient Cases 23-29% Up to 0.30m extra Private Hospitals Inpatient Bed Days 25-32% Up to 0.20m extra Day Patient Cases 24-28% Up to 0.13m extra Projections of demand for healthcare in Ireland, : First report from the Hippocrates Model, ERSI, October 2017

8 Irish Government Healthcare Reform Programme 2016 cross party political consensus for long term vision of Ireland s health policy. Universal Single Tier Public Health System - universal access to a broader range of health & social care services Integrated Care - delivered at the lowest appropriate level of complexity Private Health Insurance will continue to exist as a complimentary system But Private care in public hospitals will be eliminated Funding Model General Taxation Establish a single national health fund Additional Capital Funding Tax relief on PMI retained Implementation The Challenge! What does this mean for the Private Health Insurance Market? Shrinkage in PMI Market Private Care in Public hospitals will be eliminated Impact on PMI Market 8

9 Overview of Irish PMI Market 45% % Population m 2.06bn Lives Insured 17 Total Claims 17 1,220 Avg. Premium 17 Market Share by Age 17% Claims Source: HIA Annual Report 2017 Source: Vhi Finance calculations derived from HIA Annual Report 2017 data Vhi Finance calculations derived from HIA 2017 Annual Report (2017 figures open member excluding restricted membership) *Laya Healthcare a subsidiary of AIG and Irish Life Health a subsidiary of Great West LifeCo INC 9

10 Irish Private Health Insurance Market PMI Market Tightly Regulated Community Rate Open Enrolment Risk Equalisation Scheme Prescribed Basket of Benefits Life-time Cover Risk-rating prohibited No discrimination on basis of age, gender, health High-level of Prescribed Benefits Broadly all public hospital procedures Life-Time Cover & Open Enrolment Insurers cannot refuse cover or renewals Anti-Selection Measures Limited waiting periods to prevent selection Core objective of market rules is that there should be no incentive to compete on the basis of risk selection... 10

11 Premium Premium Market Rules Community Rated Premium Risk Rated Premium Age Age

12 Risk Equalisation Scheme Levy Age & Health Credit c c c c Risk Equalisation Fund 670m c c Vhi pays 56% of all levy payments but recovers 70% of credits *Laya Healthcare a subsidiary of AIG and Irish Life Health a subsidiary of Great West LifeCo INC

13 30% 62% 13

14 Summary Demographic Challenge Supply Challenge Healthcare Reform Programme Agreed Reform programme has implications for PMI Implementation is a challenge! 11 14

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