Session: Private Health Insurance
Session Title: Private Health Insurance
Time: Tuesday 3:45 p.m.-5 p.m.
Room Bayside 204A
Session Type: Abstract Driven Session
Chair:Christian Gericke (Wesley Research Institute and University of Queensland)
Presenter: Ricky Jansen Waworuntu (PT AJ InHealth Indonesia. Marketing Office)
Abstract (241 words)In 2004, Indonesian government had declared the social security for Indonesian citizens through the Law No.40/2004. In fact today only around half of the population is covered by health insurance system (public or private) revealed that the implementation progress was going very slowly. In 2011, government enacted the Law No.24/2011 about the establishment of its Legal Structure of administrators (BPJS) that appointed the National Health Insurance (NHI) to provide basic health coverage for all Indonesian citizens. Nevertheless, there are still possibilities for private health insurance (PHI) to keep their existence since the demand of higher level of health services remained explicitly recognizable. However, they need to anticipate the challenges such as how to synchronize the benefits with the National Health Insurance that provide standard benefit in managed care approach while keeping their profit objectives. This paper will explore the role of private health insurance that applied managed care in the National Social Security System in Indonesia. Recently, InHealth is the biggest private health insurance in Indonesia with managed care approach. Here, it will provide the framework of managed care implementation by InHealth with analysis from both, health and economic perspectives. In addition, it will review the challenges and interventions taken. Through this paper, it will be acknowledge that the existence of private health insurance with managed care approach might provide beneficial supports for the accomplishment of Indonesian National Social Security System. Keywords: Indonesian National Social Security System, PHI, Managed care, InHealth
1966—1972 : Frater Primary School, Manado
1972—1975 : Don Bosco High School, Manado
1975—1979 : SMA Negeri 2, Manado
1979—1986 : Medical Faculty, University of Sam Ratulangi, Manado
1994—1996 : Magister of Management, Airlangga University, Surabaya
1987 – 1998 : national private company
1998 - March 2009 : PT Askes / National Health Insurance (Persero),
last position Head of Comercial Branch of Central Jakarta
2009 – Oktober 2012 : PT AJ InHealth Indonesia, Head of Marketing Office Jakarta I
2012 - : PT AJ InHealth Indonesia, Head of Marketing Office Makassar
Recent Presentation History
National Seminar on Family Doctor Practices in Indonesia Jakarta, 2011
Title : The Role of InHealth Family Doctor in Public Health services
2nd ASEAN REGIONAL PRIMARY CARE (ARPaC) Conference Jakarta, 24-26 November 2011. Title : Family Doctor as Insurance Company Provider
National Seminar on Standard Fare for Doctor and Hospital Jakarta, 4 Oktober 2012. Title : Variation and Negotiation for Hospital Fare
Key Terms: Indonesian National Social Security System, PHI, Managed care, InHealth
Author (1): Ricky Jansen Waworuntu (PT AJ InHealth Indonesia. Marketing Office)
Presenter: Andrea Menclova (University of Canterbury. Economics & Finance)
Abstract (368 words)New Zealand has a two-tier healthcare system where all New Zealanders are covered under a public health insurance program but can privately purchase private health insurance as a supplement. The market for private health insurance is important in New Zealand as it provides the opportunity for individuals to have quicker access to health care. It is also an effective way of diverting costs away from the public sector, reducing the strain that health expenditure can have on the government’s budget. Currently, approximately a third of New Zealanders have private health insurance coverage. The purpose of this paper is to investigate whether this number fluctuates with the business cycle by empirically estimating the effect of changes in the unemployment rate on the number of individuals covered by private health insurance. Our data comes from the Health Funds Association of New Zealand which has provided us with quarterly national numbers of private health insurance contracts, new lives covered, and contract terminations for the period from January 1999 to September 2009. Overall, our results indicate that unemployment decreases private health insurance coverage in New Zealand but the effects are not large. Men are more responsive than women which is likely due to the higher proportion of men in the labor force. In particular, a one percentage point increase in the unemployment rate is associated with a 0.35 percent decrease in the coverage rate for men and a 0.23 percent decrease in the coverage rate for women. Interestingly, our findings suggest that the insurance coverage of the elderly is relatively more affected by changes in the unemployment rate than the coverage rate of prime-age population. This is possibly due to the negative income effect of economic downturns on the elderly via low interest rates. Studies using US data have reached qualitatively similar findings. Finally, our results show that most of the coverage changes in New Zealand occur due to a lower take-up of new plans rather than terminations of existing plans. This is intuitively appealing as individuals with private health insurance should be less willing to terminate their coverage with changes in the business cycle as they could face long-term losses in the form of exclusion of pre-existing conditions from future contracts.
Key Terms: private health insurance coverage, business cycle, New Zealand
Authors (2): David Chamberlain (University of Canterbury. Economics & Finance) and Andrea Menclova (University of Canterbury. Economics & Finance)
Presenter: Ke-Zong Ma (Kaohsiung Medical University. Department of Healthcare Administration and Medical Informatics)
Abstract (500 words)A basic prediction of theoretical models of insurance is that if consumers have private information about their risk of suffering a loss there will be a positive correlation between risk and insurance coverage – insurance markets will be prone to adverse selection. However, many empirical applications find no evidence for adverse selection in different insurance market like markets for life insurance or Medigap insurance. In some markets, there can even be found a negative correlation between insurance cover and experience of risks. In the de Meza and Webb (2001) theoretical model, a more risk averse individual demand more insurance and at the same time tries to minimize the probability of the occurrence of risk. Risk aversion is not observed by the insurer but in this case this information asymmetry dose not lead to adverse selection; it is rather a source of the opposite, namely advantageous selection. In this study, we test empirically whether risk aversion is a potential source of advantages selection in the Taiwanese market for supplementary private health insurance (PHI) for inpatient and outpatient care utilization. The degree of risk aversion is not observed by the insurance company and usually also not observed by the econometrician; hence, the individual health behavior or self-assessed health is often used as a proxy variables in empirical applications. In contrast, we do not rely on proxy variables for risk tolerance but use a measure of risk aversion concerning health matters that is directly obtained by the survey instrument, namely the self-stated degree of risk aversion as regard one’s health. We want to analyze how risk aversion is correlated with both the likelihood of buying supplementary PHI in a certain year and the occurrence of the insured risk in the future. We use two detailed health and health care utilization datasets in Taiwan: the population-based 2005 National Health Interview Survey (NHIS), which linked to the 2004-2007 National Health Insurance claims dataset. As a variable that is not observed by the insurer, the 2005 NHIS questionnaire for aged 25-64 individuals includes the individual degree of risk aversion as regards health matters by asking the question: “How would you rate your willingness to pay if the government is going to provide more types of vaccine with a copayment required?” In economics the willingness to pay for a lower accident probability, a special case of risk reduction, is popular essentially in health economics to value risk transformation. Our approach is to match individuals who have a comparable health status, age, income and other important characteristics but differ in their risk aversion. We use kernel matching and caliper matching. We find little evidence for information asymmetries in the Taiwanese market for supplementary PHI for hospital stays. Risk aversion is a source of advantageous selection for males. That is, risk averse men have a higher likelihood of buying supplementary PHI and, at the same time, a smaller number of hospital stays within a period of three years after purchasing the insurance. No effects can be found for women.
Dr. Ke-Zong Ma.received her Ph.D. in Health Economics from the University of North Carolina at Chapel Hill (UNC-Chapel Hill) in 2007, and she also holds a Masters degree in Economics from UNC-Chapel Hill. Dr. Ma is now an Assistant Professor in the Department of Healthcare Administration and Medical Informatics at Kaohsiung Medical University. Her research interests in health economics include health insurance, mental health, and applied econometrics.
Key Terms: risk aversion, private health insurance, advantageous selection, Taiwan
Author (1): Ke-Zong Ma (Kaohsiung Medical University. Department of Healthcare Administration and Medical Informatics)
Presenter: Daniel Lukas (Technische Universität Dresden. Dep. for Business and Economics)
Abstract (440 words)The introduction of the health care fund and the unitary contribution rate in the context of the law for the promotion of competition among statutory health insurances in Germany influenced the parameters of competition among (statutory) health insurances in large measure and thus raised interesting questions. While the scientific debate focuses on the competition on part of the providers (hospitals, physicians) especially after the introduction of diagnosis related groups, the theoretic discussion on part of the insurance companies is generally limited to the process of risk selection. In an environment, in which statutory health insurance companies cannot differentiate via the product price (which is now set exogenously), other parameters of competition should become very important. Price differentiation can only take place by means of a contribution reimbursement in the event of an insurance company’s good sound economic situation or by additional contributions charged by the insurance companies in case of insufficient coverage through the regular contributions. Likewise an increased sensitivity of insurants regarding differences in the contribution rate, especially additional contributions, can be assumed. Moreover, a morbidity-based apportionment of funds to the statutory health insurance companies in the sense of a fair premium allows ignoring initially the relevance of individual risk types. This enables an altered contemplation of the competition of medical insurance companies since a selection according to good and bad risks as relevant drivers of competition is omitted. The paper analyses the competition of health insurance companies in the context of this limited price competition. To do this, the paper employs a model by Montefiori for the hospital market and applies it to health insurances. In our model we assume that a regulator, i. e. a suitable administrative state authority, determines the amount of the contribution rate (price) for the insurance, which is valid for all health insurance companies. Health insurance companies then have the possibility to approach the different (potential) insurants by horizontal (offering gratuitous add-on benefits) or vertical (offering special quality features such as advice over the phone) differentiation. The results indicate that the competition between insurance companies, given a fixed insurance premium, may lead to a provision of special quality features. Hence, an additional government regulation of special quality features is not necessary. However, the higher the regulated premium the stronger is the competition between the insurers. In particular, there is an interaction between parameters of the horizontal and vertical product differentiation. There are incentives to undercut the competitor in the horizontal dimension and overbid the competitor in the vertical dimension. However, while a welfare gain can be derived, its allocation between the insurer and insurant strongly depends on the switching costs for the insurant.
Daniel Lukas, Health economist, Technische Universität Dresden, Dep. of Business and Economics, Chair of economics, esp. Economic Policy and Economic Research, Member of the Centre of Health Economic Research at the Technische Universität Dresden
Key Terms: health insurance, vertical and horizontal competition, price regulation
Authors (2): Daniel Lukas (Technische Universität Dresden. Dep. for Business and Economics) and Dennis Häckl (Technische Universität Dresden. Dep. for Business and Economics)