Challenges And Opportunities In Sustainable Health Insurance Funding Across Europe – In the context of rising healthcare costs (with a growth rate of 5-6% per year), APRA has surveyed 15 Private Health Insurers (PHIs) on their resilience to the Sustainability Challenge and identified areas for improvement.
The letter Financial Sustainability Challenges In Private Health Insurance, published on 3 June 2019, noted that APRA’s assessment found ‘many PHI do not have credible strategies to reduce risk’ managing affordability and government policy changes. The challenges posed by the regulator are many of the themes of the Institute’s Green Paper How to make private health insurance healthier.
Challenges And Opportunities In Sustainable Health Insurance Funding Across Europe
“The proportion of the privately insured population over 65 is now nearly double what it was a decade ago.” Scope of review
Annual Report 2021
Due to the possibility of government policy changes and their significant impact on the sector, the assessment carried out is quite narrow.
Affordability risk is mainly considered qualitatively and only one PHI has prepared for an adverse affordability scenario.
A better strategy is to ‘mitigate, rather than absorb the impact of affordability risk’. These strategies focus on providing ‘less expensive measures for the delivery of medical services’ and ‘services that are affordable for all policy holders, especially for those who are younger and healthier and may not need hospital care.’
Some of the better strategies include ‘developing customized insurance offerings that deliver value to policyholders while meeting government objectives’ and ‘using expertise and data to conduct scenario analysis’ which ‘can also be used to inform policy solutions that can be proposed. to the Government’.
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There is some evidence that cost savings and added value have been realized from the actions taken. In general, the best entities ‘demonstrate an iterative approach to implementation by evaluating effectiveness and reviewing appropriate strategies’.
This review may indicate a shift in APRA’s focus from short-term financial prospects to long-term financial stability. This shift requires PHI to have actionable strategies to address emerging risks. There are many opportunities for this environment, which may include:
Zachary is a member of the Institute’s Actuarial Education team, a casual senior consultant at Quantium Health and a fellow candidate at Macquarie University’s Center for Health Economics. He is a member of the Health Practice Committee and health editor for.
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