Category Archives: Global

Assessing the international private medical insurance market

International private medical insurance (IPMI) provides employees with long-term travel obligations access to broader healthcare services. The global IPMI market has become very competitive. Expectations are that the market will continue to grow. In this article, Milliman’s Joanne Buckle and Neha Taneja take a look at some key pricing and experience rating items for group IPMI issuers to consider.

Here is an excerpt:

Dealing with multiple geographies, changing regulations, various health systems, diverse demographics and movement of the insured population results in a number of additional complexities when compared to rating a traditional PMI policy. Here are some of the key factors IPMI providers need to consider:

  • Local data limitations: The wealth of data that a traditional health insurer holds on domestic PMI policies is usually insufficient for pricing an IPMI product, because:
    • IPMI policies usually offer a more much comprehensive benefit package.
    • Differences in the socio-economic profile of the target market, resulting in markedly different benefit features and claims experience.
    • Distinct claiming patterns due to the international nature of the benefits.
    • Variation in utilisation patterns by country and nationality.
    • Portability offered under an IPMI policy allows full access to benefits wherever the employees are and it is difficult to predict where different services will be consumed.Obtaining reliable and relevant data with a desired level of granularity can be challenging making it difficult to get any credible results on which to base sound conclusions.
  • Geographical area of coverage: This is considered one of the key rating factors for an IPMI policy as claims costs can vary significantly between countries. For example, most insurers provide separate cover for ‘worldwide excluding US’ and ‘worldwide including US’, because healthcare costs are typically much more expensive in the United States than anywhere else in the world. Most insurers would classify countries into different regions/levels/zones that have broadly similar costs and healthcare systems for more accurate rating. However, constructing such classifications is difficult because:
    • Limited claims experience for some countries and lack of data for others makes the classification statistically less sound.
    • Even countries with similar costs may have different types and quality of healthcare services, disease trends and state healthcare systems which can make it difficult to group countries into particular zones. For example, insurers may experience lower claims ratio in countries with well-functioning state healthcare systems, which allow access for temporary residents. The rules on whether an overseas national is eligible to access the local state healthcare system are complex and vary by destination country, as well as nationality. In addition, the likelihood that an employee will access state coverage depends on the quality of the state healthcare system, as well as the nationality and cultural preferences of the employee.
    • Volatility in exchange rates can result in the pricing zone relativities becoming rapidly obsolete.

All of these factors are likely to have a significant impact on the claim frequencies and costs. As a result, trying to price cover accurately for a multinational company with employees residing in multiple countries across the globe is quite a task.

Medical underwriting and risk adjustment practices: United Arab Emirates

Health insurance models vary from country to country. As highlighted in our first series of articles on international health markets, governments often dictate the role of private and public health insurance within any country. Milliman has produced a new series of blogs focused on the medical underwriting and risk adjustment practices of eight countries: Australia, Ghana, Ireland, New Zealand, Saudi Arabia, South Africa, Spain, and United Arab Emirates. This is the eighth article in our series.

Background to healthcare in the Middle East
The Middle East is going through rapid health reform with the transformation of a historical publicly funded health system into a hybrid public-private insurance model. The governments in these countries are facilitating the development of the provider community through the legislation of compulsory health insurance coverage, thus shifting the onus of the development of healthcare from the public sector to a public-private partnership, with the help of the private provider community and insurance industry.

Though no more than 10% of the population of any one Gulf Cooperation Council (GCC) country is currently covered by insurance, this is expected to change quickly. Workers covered under these plans can choose care at either public or private institutions, a system that has the benefit of ensuring that public providers must learn to generate claims in order to be reimbursed by the government. Once private health insurance takes hold, patient volumes for private providers will rapidly increase, as patients are allowed to pursue reimbursed care at private institutions.

Depending on the country, the health insurance opportunity could either be to enter as a stand-alone private player, or to form a joint venture with the government to establish and manage a national insurer.

United Arab Emirates (UAE)
UAE is a typical hybrid public-private insurance model. By regulation, UAE nationals and citizens of other GCC countries receive free inpatient and outpatient healthcare at government hospitals and clinics, fully funded by the state. However, UAE nationals can also opt to purchase private medical insurance coverage through state-subsidized premiums.

The leading health insurance company in Abu Dhabi is Daman National Health Insurance Company, owned by the government, offering health insurance to expatriates and their families. Daman commenced writing business on May 1, 2006, and has a cooperation agreement with Munich Re, which provides reinsurance and direct underwriting and claims expertise. Daman will provide insurance services for all government expatriate employees for a period of 10 years from July 1, 2006.

Daman also provides private medical insurance for all UAE nationals through its Thiqa plan. As of April 2009 there were about 500,000 members in the Thiqa plan. Members receive a Thiqa card with which they can obtain private medical treatment within the Daman preferred provider network, subject only to on-the-spot cash payment at the clinic or hospital by the individual in respect of member coinsurance. Otherwise the services are paid for directly by Daman, subject to production of the Thiqa card at clinics and hospitals.

A change to the Thiqa plan was announced in 2009 by Daman, which introduced a 50% coinsurance payment for all dental treatment and for pharmaceuticals sourced in the private sector. Pharmaceuticals sourced in the public sector remain free of charge for all UAE nationals. Salamat, an extended plan similar to Thiqa, is now also available for UAE nationals, providing medical expenses coverage on an optional regional or worldwide basis.

Resident expatriates, who received free healthcare in the past, now have to pay for treatment at government medical facilities, albeit at a subsidized rate. However, compulsory health insurance for expatriates is now fully implemented in Abu Dhabi, under Law No 23 of 2005.

The standard compulsory health policy for expatriates and their families resident in Abu Dhabi covers the employee, spouse, and up to three dependent children under the age of 18. The onus to purchase compulsory insurance for expatriate employees and their families lies with the employer. No expatriate work permits are issued or renewed without proof of insurance and proof of premium payment. The scheme has been a success, with the insured population exceeding 1 million in 2009.

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Medical underwriting and risk adjustment practices: Saudi Arabia

Health insurance models vary from country to country. As highlighted in our first series of articles on international health markets, governments often dictate the role of private and public health insurance within any country. Milliman has produced a new series of blogs focused on the medical underwriting and risk adjustment practices of eight countries: Australia, Ghana, Ireland, New Zealand, Saudi Arabia, South Africa, Spain, and United Arab Emirates. This is the seventh article in our series.

Background to healthcare in the Middle East
The Middle East is going through rapid health reform with the transformation of a historical publicly funded health system into a hybrid public-private insurance model. The governments in these countries are facilitating the development of the provider community through the legislation of compulsory health insurance coverage, thus shifting the onus of the development of healthcare from the public sector to a public-private partnership, with the help of the private provider community and insurance industry.

Though no more than 10% of the population of any one Gulf Cooperation Council (GCC) country is currently covered by insurance, this is expected to change quickly. Workers covered under these plans can choose care at either public or private institutions, a system that has the benefit of ensuring that public providers must learn to generate claims in order to be reimbursed by the government. Once private health insurance takes hold, patient volumes for private providers will rapidly increase, as patients are allowed to pursue reimbursed care at private institutions.

Depending on the country, the health insurance opportunity could either be to enter as a stand-alone private player, or to form a joint venture with the government to establish and manage a national insurer.

Saudi Arabia
The healthcare network within the Kingdom of Saudi Arabia compares well with its counterparts in the West, and its health systems have been ranked in the top 30 in recent World Health Reports from the World Health Organization. Moreover, Saudi Arabia has been ranked as the largest among 17 healthcare markets across the Middle East and Africa, establishing it as one of the most valuable healthcare markets in the region.

Health services in the Kingdom are delivered through both the public (approximately 80%) and private (approximately 20%) sectors.

Public healthcare system
The provision of free healthcare is enshrined in the constitution of Saudi Arabia. Free healthcare is provided to all nationals and expatriates working in the public sector and to all pilgrim visitors (two million to three million pilgrims, or more, visit the Kingdom every year from all over the world). These services are delivered through the Ministry of Health (MOH) and other government agencies.

The healthcare system has two tiers. The first is a network of primary healthcare centers and clinics that provide preventive, prenatal, emergency, and basic services. These are supplemented by mobile clinics that visit remote rural areas dispensing vaccines and performing basic medical services. The second tier comprises the hospitals and specialized treatment facilities that are located in major urban areas throughout the country so as to be accessible to all.

Funding the free public healthcare services is an ever increasing challenge faced by the government, driven in particular by the rapid growth in population, the high price of new technology, and the growing awareness about health and disease among the community. Many large employers are already purchasing group medical expenses insurance for both their Saudi and expatriate staff, in order to avoid discontent among the Saudi staff members when only expatriate staff have access to private treatment.

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Medical underwriting and risk adjustment practices: Ireland

Health insurance models vary from country to country. As highlighted in our first series of articles on international health markets, governments often dictate the role of private and public health insurance within any country. Milliman has produced a new series of blogs focused on the medical underwriting and risk adjustment practices of eight countries: Australia, Ghana, Ireland, New Zealand, Saudi Arabia, South Africa, Spain, and United Arab Emirates. This is the sixth article in our series.

The national public health system in Ireland provides access to health services to all people ordinarily resident in Ireland. The extent to which public health services are subsidized depends primarily on the means of the individual involved. Income limits are defined, varying by age category (higher limits apply for individuals over age 70 with some phasing in for the 66-69 age category). In addition, investments and other assets are notionally converted to income using predetermined income factors.

Individuals with total notional income below the relevant limits are entitled to a “medical card.” Medical card holders are entitled to free GP (family doctor) visits, prescribed drugs and medicines (with a nominal charge of 50 cents per prescribed item), public hospital services, dental services, maternity and infant health services, and a range of other services.

Individuals with total notional income above the relevant medical card limits, but below a defined higher limit, may be entitled to a “GP visit card.” The GP visit card is valid for a defined period of time and entitles the holder to free GP visits.

Individuals with weekly income exceeding the GP visit card threshold are not entitled to free GP visits and must pay for many of the services that are provided free to medical card holders, but many significant subsidies apply.

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Medical underwriting and risk adjustment practices: South Africa

Health insurance models vary from country to country. As highlighted in our first series of articles on international health markets, governments often dictate the role of private and public health insurance within any country. Milliman has produced a new series of blogs focused on the medical underwriting and risk adjustment practices of eight countries: Australia, Ghana, Ireland, New Zealand, Saudi Arabia, South Africa, Spain, and United Arab Emirates. This is the fifth article in our series.

South Africa’s health system consists of a large public sector and a smaller but fast-growing private sector—these two sectors are essentially disconnected and exist in parallel. There are also a few non-government not-for-profit organizations that are considered part of the system. These three sectors form the national health system under the stewardship of the Minister of Health.

The public health system is a tax-funded system that provides free primary healthcare to all citizens. At hospital level, payment for services is means tested—in 2011, anyone with an annual income over ZAR36,000 (about US$4,000) has to pay partly and those with annual incomes over ZAR72,000 (about US$8,000) must pay in full. The model is based on a referral basis for escalating a patient through the levels of care. The entry point is a community nurse who may seek guidance from a general practitioner.

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