Of all the changes that Obamacare has made to health insurance in the United States, one of the earliest and most well-known bits of legislation kept young adults on their parents’ health care plans longer. Starting in 2010, insurance plans that extended coverage to dependents of the main beneficiaries were required to continue covering those dependents until they had reached the age of 26; previously, insurance providers could cut coverage to dependents aged 19 years and older.
This insurance law revision was met with much praise – young adults in an unstable job market could have a better guarantee to quality health care, and because many 20-somethings would choose to go uninsured rather than find their own policy, Obamacare’s dependent provision has meant improving preventative health care and saving costs in emergency medical services. According to information from the White House itself, more than 3.1 million young adults are now on health insurance thanks to the Affordable Care Act.
However, there is one health care service that these under-26 dependents might not be receiving: maternity care. Read more
As the United Kingdom copes with an aging workforce, employers are becoming more aware of the needs of older workers – especially in terms of health and insurance. According to a 2012 Health of the Workplace report by insurance provider Aviva, 29 percent of UK employers have seen a rise in the average age of employees, and 37 percent expect this trend to continue. The report also found that employers are concerned about giving these older workers access to health care.
Although the United Kingdom has a free, universal health system for all citizens, some people choose to invest in private insurance. UK residents over 55, for example, often opt to purchase a separate health plan in order to cope with a chronic condition such as diabetes or heart disease. By using private insurance rather than relying on the National Health Service, a customer can enjoy shorter waiting times for treatments, schedule doctor appointments in a more timely fashion, and exercise more choice in finding a physician or hospital.
Some employers already offer workers private health insurance, as part of a workplace package to encourage higher caliber employees to join the company. A promise of private health insurance will be even more enticing to potential employees who bring much maturity, skills and experience, but due to their age, want a job that will provide a strong safety net in terms of health care benefits.
One reason for the increasingly older workforce in the UK has been the end of compulsory retirement. Before October 2011, employers could mandate that any workers 65 years of age or older leave the workplace. With the end of compulsory retirement, along with an unstable European economy, more and more employees in the UK are choosing to stay with their jobs past the age of sixty-five. These are exactly the workers to whom private medical insurance will often appeal.
Indeed, private insurance for employees can benefit their employers as well. The Aviva Health of the Workplace study found that 39 percent of employers surveyed had experienced workers unable to function at full capacity due to long waits for medical treatment. With private insurance, a shorter wait time to see a doctor or receive a treatment can mean a more functional employee. This situation is especially true for older workers. The chances of being diagnosed with a chronic disease increase with age, and the group UK Cancer Research has found that more than 50 percent of all cancers occur in people aged 50 to 70 years old.
In a report entitled, “An Aging Workforce: The Employer’s Perspective,” researchers from the Institute for Employment Studies also took a look at the issues surrounding an older workforce. The study points out that around one half of people who decide to retire early do so because of poor health. Many of these people may be managing a chronic illness or suffering from a musculoskeletal disorder; afflictions which can often be improved with access to better health care or a change in working conditions.
The Institute for Employment Studies also notes the need for better information about how employers can help their older employees deal with potential health issues. Older workers can often provide a valuable resource in terms of experience and tacit knowledge, but will often choose jobs that allow for more flexibility when a health problem arises. When employers are more aware of older workers’ needs, the company can run more smoothly.
The issue of an aging workforce in the United Kingdom is becoming especially pronounced thanks to a warning last year from Britain’s CIPD, also known as the world’s largest human resource association. CIPD (the Chartered Institute of Personnel and Development) has warned that although around 13.5 million jobs will be created during the next decade, a mere 7 million young people will be entering the workforce. What’s more, estimates from the UK government indicate that by 2020, 36 percent of workers in Great Britain will be 50 years of age or older. With a greater amount of older people in the workforce, and indeed a greater need for older people to stay in the workforce, the question of private medical insurance may become even more important to employers in the near future.
MSH International entered the Chinese insurance market in 2001, setting up a Third Party Administrator service that allowed the parent company to establish MSH China. Based off their success in Europe, MSH began to offer new health and life insurance product options in the region. Read more
William Russell has announced a new campaign for 2013 that is designed to combat trends of excessive premium inflation in the UAE. The international insurance provider has decided to offer increased flexibility to its clients when they make a choice on their medical network options and prices. Cheaper provider networks will soon be available for clients who are looking for a chance to manage existing claims costs at their own discretion, and based on their needs or situation at the time.
Read the rest of the William Russell & Medical insurance UAE article
One of the signs that Dubai is continuing to show recovery after the 2008 Financial Crisis is through the growing health insurance industry. Many of the leading health insurance providers in the region are all reporting increasing numbers of insurance quotes and information requests from people interested in obtaining medical insurance.
Globalsurance continues to expand its services and operations in the region, attributing the influx to more and more inquiries from new clients and expatriates that are relocating to Dubai.
Tim Slee, Global Sales Director for Bupa International commented on this growth: “There is an exciting new level of increased activity across the Middle East, this increased interest has led to a strong conversion rate of international medical insurance sales in the UAE.” Bupa International has seen encouraging performances and maintains a strong presence in the region because of the diversified products they offer with their cooperation with Globalsurance.
Cigna is in a strong position to see growth in its international and commercial healthcare coverage, according to BMO Capital, a financial services company that provides clients from businesses and government’s access to a wide variety of services and products. BMO believes that some of the most important parts of the health insurance providers business are also strengthening.
Furthermore, the company’s stock prices are also projected to increase, as analyst Dave Shove increased his 12-month anticipation for the price of the company’s stock from USD $60 to $65.
Earlier this month at its annual investor day presentation, Cigna Corp released their projections for 2013, with adjusted earnings of about USD $5.80 to $6.25 per share. These figures are lower and more conservative than average expectations from other analysts, which set expectations at about USD $6.33 on average, according to FactSet, a multinational financial data and software company.
Thanksgiving means a lot of different things to a lot of different people. For some, it’s a hectic day of travel and family reunion; for others, it’s all about the big game and the even bigger turkey; but nearly everyone can agree that Thanksgiving is an absolutely excellent excuse to eat good food with good people.
Unfortunately, Thanksgiving is also a time when insurance claims spike. Due to just a few dangers associated with the holiday, that final Thursday in November can expect to see claimants file for house fires, road accidents, and personal injury. These issues are to be expected, what with hubbub and hassle in the kitchen, along with long car journeys and unexpected bouts of wintery weather. However, you may be surprised to learn what many firefighters as well as other health and safety workers deem Danger Number One on Thanksgiving – deep fat turkey fryers.
From the 21st of December 2012 European insurers will no longer be able to use gender as criteria when assessing risk factors to price premium plans. The European Court of Justice ruled a decision in March 2011 determining that insurance policies reliant on gender factors were incompatible with the prohibition of discrimination under the European Union. The final Article prohibits:
“…any results whereby differences arise in individuals’ premiums and benefits due to the use of gender as a factor in the calculation of premiums and benefits.”
Initial plans for the Gender Directive began in 2004, with the goal to enforce equality for men and women when accessing goods and services. The Directive would dismiss the use of actuarial factors related to sex when insurance companies determined the provision of insurance to clients. Individual plans could no longer be calculated using gender as a factor. Despite the campaign, the court ruled that insurance companies could continue to identify sex as a determining factor when defining differences between premiums and benefits.
Globalsurance, with great excitement, can announce that as of November 1st 2012, Allianz Worldwide Care individual premiums will increase by just 5 percent. This increase rate is all the more impressive when put into context with the 11 percent global average increase over the past 5 years across the Private Medical Insurance sector.
Despite bleak global economic outlooks and rising inflation, Allianz has remained successful in the iPMI sector and in the last five years their average increase has come in at only 8 percent as highlighted within Globalsurance’s latest Insurance Review.
AETNA is one of the latest insurers to reveal the new pricing points for their range of International Private Medical Insurance (IPMI) products. Together with BUPA, AETNA has also revealed an increase in the cost of its IPMI plans; with both companies providing similar adjustments levels (10% Aetna, 10.3% Bupa) that match the current global medical inflation trends and compensate for the increasing costs of medical treatment at major international hospitals.
Customers who have purchased plans after October 1st 2012, or who will be renewing their policies after that date will have the adjusted premiums placed on their policy.
While the increase of 10 percent may seem steep, it is important to realize that this is actually lower than AETNA’s 5 year average 11.9 percent premium inflation rate; and is only higher than the increases the company placed on its premiums in 2010 and 2012 which were 9.9 and 8.2 percent respectively.
However, outside of the normal yearly adjustment of plan premiums in relation to heightened levels of global medical inflation AETNA has taken some welcome steps to provide more comprehensive protection to policyholders and their families.
Starting with the inclusion of Traditional Chinese Medicine benefits in the prescribed under both Inpatient and Outpatient medication Coverage, in addition to offering rehabilitation protection under those same benefits, AETNA has drastically improved its maternity package by including expanded coverage for a range of maternity and infant related treatments.
Under AETNA plans, as of October 1st, they have extended the maternity coverage under the complications of pregnancy benefit where they will now offer post-natal check-ups for 6 weeks after the complicated birth. Furthermore, keeping with the family friendly developments, AETNA plans are now able to provide coverage for congenital anomalies in an infant up until the child has reached 12 months of age.
In a clear sign that the company is intending to attract more business from expatriate families around the world, AETNA has also improved the protection offered to dependents who are not infants by enabling coverage up until the age of 18 if the dependent is living with the policyholder, or up until the age of 26 if the dependent is enrolled in full time education.
Continuing the changes are a number of considerations which will enable even further flexibility to policyholders with an AETNA plan, including an extension of the claim submission deadline to 180 days after treatment – allowing for more give in relation to customer’s lives. However, AETNA plans will now limit Accidental Dental Treatment to one visit within 30 days of the initial accident or treatment which warranted the Dental care.
AETNA, which took over international insurance company Goodhealth, has shown with the update of its coverage offerings that it is committed to providing exceptional levels of protection to foreign nationals, and their families, whom are located around the world. While the average premium increase may, initially, seem high, the inclusion of a range of more innovative and comprehensive coverage should see the company well positioned to see success for the remainder of the year.
A recent publication from the Singapore Department of Statistics has stated that the city state has continued to see a year-over-year increase in its population from 5.18 million in 2011 to 5.31 million in 2012. However, the reality of the situation is that annual population growth has slowed from 3.5% to 2.5% and officials and academics in Singapore have recognized that the city may eventually run into the same aging population issues that have begun to effect other developed countries.
Read the full article here
Globalsurance has learnt that Bupa is launching a new product for the Chinese market. Bupa has teamed up with China based Alltrust Insurance Company to provide Bupa Premier Worldwide Health Options (PHWO), which becomes available from the 1st of October. PWHO is unique in that it will consider covering pre-existing medical conditions, a first for international private medical insurance plans in China.
On Wednesday, pharmaceutical company Merck announced the results of a clinical trial it conducted for a new once-a-week pill for sufferers of Type II diabetes.
Although the pill, currently named MK-3102, still has to go through Phase III trials before it can be submitted for government approvals, after 12 weeks of treatments patients who took varying doses of the drug showed a significant lowering of their blood sugar levels.
As the once-a-week pill is poised to replace current treatments that include daily pills or injections, it is viable to examine the potential effects of its development, not only on the patients it will treat, but also the medical and insurance industries in general.
World Health Organization statistics state that there are currently 346 million people with diabetes worldwide, and that 90% of those people suffer from Type II diabetes.
According to WHO statistics the countries that have the greatest number of diabetes cases in the year 2000 were India with over 31 million, China with over 20 million and the United States with over 17 million. These countries do not even represent the nations with the highest per capita incidences of diabetes. That distinction belongs to countries such as Indonesia, Saudi Arabia, Libya and Iran.
In the country with the highest number of cases of diabetes, India, it is becoming more and more common for the upper class to develop diabetes. In contrast to developed countries like the United States, where lower income families are more prone to obesity due to eating low cost, low quality food, in India it is the rich that eat fattening foods, gain weight and then become diabetic.
Health insurance, however, is not common for people of any social class in India. Although the rich do have the ability to pay for their diabetes-related medical needs for a longer period of time, the long-term costs associated with the disease is crippling families financially. Middle-class diabetics in India can expect to spend 25 percent or more of their income on medical expenses. Even those with health insurance will find that policies generally do not cover diabetes.
Some insurance companies in India, no doubt recognizing the size of the market and the rise in demand, now offer specialized diabetes coverages that cost anywhere between US$900 to $9,000 per month. These providers are shirking the law of averages that would dictate that this type of coverage is not feasible in a country in which 1 out of 8 adults has diabetes and there is a continually rising rate of occurrence. The WHO predicts that people with diabetes in India will number nearly 80 million by 2030.
Certainly new medications that will allow patients to more easily control their diabetes would be welcome in cases such as India’s, but cost is going to be a major factor for acceptance of any new drug in a country that is still plagued by poverty in many areas.
Speaking on the new drug, Merck’s Head of Diabetes and Endocrinology, Nancy Thornberry, was quoted as saying, “We think this is going to be a very attractive choice for patients who have a high pill burden. Any attempt to simplify the regimen for those patients is helpful.”
In the United States, the American Diabetes Association reports that in 2007 diabetes carried a total direct medical cost of US$116 billion, which comes to an average of over $6,500 per case to be covered by individuals and their insurers.
Currently it can be difficult, if not practically impossible, for an individual to obtain health insurance coverage to cover a chronic condition like Type II diabetes because it is considered a pre-existing condition. However, in the United States, starting in 2014, insurance companies will no longer be legally allowed to refuse coverage to children and adults based on the presence of pre-existing conditions. This change is based on the provisions of the Patient Protection and Affordable Care Act signed into law by President Barack Obama.
As this change is going to force insurance providers to accept high-risk customers in much greater numbers, it will be important for them to find low cost solutions to chronic ailments like Type II diabetes since the Act also denies insurance providers the ability to charge more based on whether a customer is sick or not.
Currently, Merck’s Type II diabetes pill offerings, Januvia and Janumet, are on track to account for US$6 billion in sales in 2012, but with new competition on the horizon and the US government alleging a connection between Januvia/Janumet and pancreatitis in its users, it is understandable that Merck would be interested in finding a replacement for its current offerings and push to quickly move MK-3102 forward.
According to biotechnology and pharmaceuticals analyst, Jon LeCroy, M.D., he expects MK-3102 to launch in 2015 and have worldwide sales of US$450 million in 2016. This figure pales in comparison to current sales of Januvia and Janumet, but whether the difference is related to a lower cost for the new drug, or simply due to low availability, remains to be seen. LeCroy also added that the drug “could become a mega-blockbuster.”
As MK-3102 is not yet on the market, it is only possible to look at new drugs in general and the medical savings that are associated with their use. Dr. Frank Lichtenberg of Columbia Business School, who has won numerous awards for his research on the economic impact of various drugs, states that “the reduction in nondrug spending from using newer drugs is 122 percent larger than the increase in drug spending.”
Seeing as Merck’s new drug would drastically reduce the frequency with which patients would take medication, combined with the potential for some Type II diabetes sufferers to be able to switch from injections to oral medication for treatment, it is easy to imagine that savings could be significant to insurers and policyholders globally. If not immediately in the cost of the drug, then in the other costs surrounding the disease.
Teetering on the brink of economic collapse is Greece, the land of ancient mythological deities, and like the Gods before them hopes and beliefs in a timely turnabout for the Greek economy are dwindling hastily. At hand is the issue of the Eurozone: does Greece stay within and keep the Euro, or will it revert back to the obsolete drachma, the original Grecian currency which existed prior to 2001?
If the Eurozone were to retract it’s inclusion of Greece, there could be drastic effects which affect not only Greece, but the entire Eurozone as well. Specifically, the once-Eurozone-greats of Spain, Italy, and Portugal, who similarly share severely weakened economies, are significantly at risk should the Greek make an exit. It is ironic that the four major players pulling down the system are Portugal, Italy, Greece, and Spain – bearing the acronym of PIGS.
What are some of the possible issues at hand? How will the lifestyle and welfare of the residents be affected? And something more topical, with the state of Greece’s public funding slashed, what will happen to healthcare and health insurance?
Should the Greek system withdraw its participation in the Eurozone, there will be widespread effects across economies not just in the Eurozone, but around the world as well. In preparation for the withdrawal, the Greek banks will probably limit the amount that a person can withdraw from their bank accounts to prevent a bank run and a collapse of Greek banks. Greeks will need to endure the changeover of their currency from Euros to drachma as well as the subsequent devaluation of the drachma. The Euro will most likely be converted to the drachma at a pre-defined rate which will remain fixed for the duration of the changeover. As it stands, the exchange rate, which was revised in April of 2012, stood at 1:340.75. There is a glimmer of hope: many sophisticated investors and those with significant savings have already shifted their funds out of their Greek banks into foreign banks. What this means is that if Greece were to recover, the money is ready to come back in, without experiencing a dismal devaluation.
Once Greece exits, there will be defaults on their debt, which still hold their face values in Euro dollars. Even with 95 billion euros of the debts face value wiped, it still represents almost 265 billion euros. But what kind of implications will that have on the other countries whose economies are also at risk? Spain, Portugal and Italy’s liquidity is affected significantly due to investor fears of economic collapse and worries about debt repayment. Since all three countries require debt financing and liquidity for day-to-day activities, the loss of foreign investments can cause serious liquidity issues. The financial health of these countries could be in considerable trouble, especially since Italy and Portugal carry a considerable amount of debt – with inabilities to pay off the interest payments on loans and bonds, both countries could default. Currently, both countries owe more than their annual GDP.
If it turns out that Greece needs to roll in the new currency, the drachma, the currency that most likely will replace the Greek Euro, will take time to officially come into place. Experts predict that it will take four months until the currency is printed and entered back into circulation. Until then, monies held in bank accounts will likely be changed immediately, while the physical Euro, or at least those denoted by a Y which is the Greek country code, will still be accepted with those.
After the drachma is returned to the Greeks, what will likely happen is inflation, or worse, hyperinflation – you may have seen those old photos of people carrying a wheel barrel of cash just to buy a loaf of bread, or starting a fire with the local currency. If hyperinflation takes place, and this may become a reality for the Greeks should the drachma drastically devalue after its introduction, a basket of goods does not. The relative value of a drachma compared to that basket of goods will widen, resulting in the price of goods soaring.
Moreover, as the drachma is worth less and less, imports become exponentially more expensive. This is not good news for Greece as it is a net import state – Greece imports more than it exports, including food. Conversely, exports will receive a great benefit from the devaluation as one of Greece’s biggest export, tourism, will surely rise due to inexpensive holidays and cheap money.
Inflation, or hyperinflation, will cause Greece to be highly unaffordable for many of those struggling amidst the grip of unemployment; stability in the region will be hard to attain until the government gets back on its feet and is able to borrow again. Residents of Greece may leave the country in a bid to reduce the effect of the devaluation, but measures may be put in place to restrict some of these movements, including provisions on bank account withdrawals.
Compounding the damage is the cut in public spending and governmental policies which affect the business community. Specifically, a lowered minimum wage will have negative effects on residents’ ability to afford goods, making daily necessities difficult to attain. Greece’s two-tiered wage cut, was disproportionately hard on the younger generation, with the minimum wage for those under 25 cut 32 percent, instead of 22 percent. The effects of this and other cuts are being felt more acutely as goods become more expensive. As there are proponents of a spending method to get out of a recession, it seems like this is almost an impossible option for Greece at the moment whose debt outpaces its GDP by over 170%.
Businesses may begin to fail – their ability to borrow money and to keep a sufficient flow of business will be seriously affected by the devaluation of drachma. Furthermore, as citizens concerns start to turn towards more essential goods, such as accommodation, food, and other necessities, relative luxury goods and services become less important in their lives. Businesses suffer due to the lack of demand for their goods and may be forced to close doors.
And what about the necessities of healthcare and the ability to receive healthcare? Already, hospitals all over Greece are feeling a financial asphyxiation which is being transferred to the patients. Supplies are low and resources are lower. As public benefits decline, people increasingly turn to the public hospitals to receive treatment where the waits are long but the prices are lower. Significant changes have been made to treatment policies, allowing only for serious cases to be treated in a timely manner, or at all. There have been numerous reports of supplies being stolen, especially syringes and gloves.
Citizens’ ability to receive healthcare will be negatively impacted and will continue to worsen as the burden on health services is driven by the declining health of citizens. Wait times will be compounded as hospitals are flooded with demand for healthcare and an increasing lack of personnel and resources to service them. Doctors and nurses may flee to private hospitals or other countries in the wake of cuts to benefits, increases to workload and the potential of frozen salaries.
The medical system is already beginning to collapse. Big Pharmaceutical companies are refusing to provide medication because of the inability of hospitals and clinics to pay. In some cases, doctors and nurses are providing healthcare and treatment with no pay and can endure such a lifestyle for only so long.
Medical insurance will be equally negatively impacted in the near future. As businesses feel the increasing effects of the slowdown, so will local health insurers as business functions are hampered by inabilities to borrow and inflation makes existing or collected premiums insufficient for providing coverage. Moreover, premiums collected before the collapse may be converted to the drachma from the Euro and may not be enough to cover the cost of providing healthcare once devaluation sets in. Premiums will probably need to rise in order to keep pace and many may cancel their plans and opt for basic health coverage through the government because they cannot afford to keep up with the increasing premiums. This is under the assumption that the Greek government will continue to provide subsidized health coverage – under austerity measures, subsidized health coverage could very well be one of the earlier things that a government will cut. This will likely result in the collapse of many local health insurers, leaving those previously insured with them without coverage.
As for international health insurance in Greece, premiums for new plans should increase. Since premiums are calculated based on a community rating, the risk profile for those in Greece is increasing alongside the cost of providing healthcare in Greece. Those who do not have health insurance should consider purchasing an international health insurance plan prior to any change in currency that may take place. The plan will be good for the year before the devaluation takes effect, resulting in confirmed coverage for the higher costs of healthcare. It will be a money saving route for the long run. As for existing international health insurance premiums, they too will probably increase in the coming years because it will be costlier to provide healthcare in the country given the lack of supplies or credit to purchase them, as well as the possible need for more people to travel abroad to seek treatment. Furthermore, the health of the residents may continue to decline, resulting in a riskier health profile to the insurance companies, especially since big pharmaceutical companies are wary of providing more supplies on credit.
This makes acquiring an international health insurance policy in Greece much more attractive now rather than later. Before the conditions are unfavorable for you to acquire insurance, acquiring now is a safe way to hedge your bets against both financial and healthcare problems in the future.
There is salvation in sight: with the devaluation of the drachma, many exports become significantly more inexpensive across the world. This makes Greeks exports attractive, helping the country get on its way to recover. However, if the country does not exit the Euro, recovery could be long and arduous.
With Greece controlling its own currency and fiscal policies, it can make provisions and decisions which can bring it out of its slump faster. For example, if Greece wanted to increase its exports, it could further devalue its currency by printing more of it. In addition, Greece has free reign to set its own interest rates, which could facilitate lending and financing throughout the region.
Argentina and Latvia are similar examples of the two options which Greece is faced with: stay with the old currency or move on to their own. Argentina was pegged to the US dollar and Latvia is part of the Eurozone. When faced with their financial meltdowns, Argentina opted to discard the pegging and Latvia decided to stay with the Euro.
What happened was Argentina’s peso devalued significantly and unemployment soared, as did inflation. But quickly after, Argentina crawled out of their depression and reached their peak output levels in just a few years. In contrast, Latvia struggled significantly while under the Euro and GDP growth plunged to the deep negatives. Living conditions continued to decrease and is projected to start recovering in the coming years.
Filed Under Aetna, Africa, Allianz, Asia, AXA PPP, BUPA, China, China insurance, DKV, Europe, Expat Insurance, Health Insurance, Hong Kong, IHI Bupa, Insurance Company, International Healthcare, Medical Insurance, Middle East, Philippines, UAE Insurance, United Kingdom | 9 Comments
In this article we will first present our findings of the premium increases and premium inflation rates in each region and country we studied, with specific insurance findings to be presented at the end. Overall our findings were that International Private Medical Insurance (iPMI) premium inflation was very high, at roughly 10.8 percent per year over a 5 year average. While variations exist between countries, the reality is that iPMI inflation rates were extremely consistent throughout the world. However, it is important to note that this is medical insurance premium inflation at the high end of the sector, and not necessarily with regards to the mass market.
Even presenting the argument that premium increases are fairly consistent on a global basis, there are some immediate outliers – Hong Kong, for example, runs at an iPMI premium inflation rate of roughly 13 percent per year, while Kenya’s premium inflation rate is approximately 9 percent per year. Although there is a difference in premium inflation rates between Hong Kong and Kenya, the difference is not overly substantial – as will be seen inside this report.
Globalsurance is pleased to reveal the results of our latest study on the international health insurance industry and rates of international medical insurance inflation around the world as of August 1st 2012. Read more
The rise of the middle class in East Asia is proving to be a boon for private healthcare providers. Kuala Lumpur based IHH illustrates this nicely. In their recent IPO, which was 132 times oversubscribed, IHH raised more than USD 2 billion and the shares climbed by more than 10% in the first few days of trading. The value of the company stands at around USD 8 billion. IHH is now the second largest hospital group on the planet, and the largest outside the USA.
Owned by Khazanah Nasional Bhd, a state owned investment arm, IHH tells a story of unprecedented growth. Khazanah started their move into the healthcare sector in 2005, when they bought a 13.2% stake in India’s largest private hospital group, Apollo Hospitals Enterprise. A string of acquisitions and investments in the following years have enabled IHH to build itself into the powerhouse that it is today, able to ride the wave of opportunity created by the growing economies of East Asia.
According to Frost & Sullivan, the market for healthcare in Asia Pacific region will grow by 8 % until at least 2015, and IHH already has plans to add another 3300 new beds and 17 hospital developments in China, Singapore, Malaysia and India, as well as expansion plans Turkey, Egypt and Lybia by the end of 2016.
The success of IHH has been largely due to their ability to fill the gap created by lagging national healthcare infrastructure and rising demand for quality medical services in countries like Indonesia and Malaysia. The strategic positioning of their Singapore based hospitals, all within a relatively short 3-4 hour flight from Malaysia, Indonesia, Vietnam, Myanmar and Bangladesh, has created a healthcare hub which IHH has been well positioned to exploit.
IHH is now applying their winning formula to expansion in other developing regions of the world. It recently bought a 60 percent stake in the owner of Turkey’s largest hospital group, Acibadem Saglik Hizmetleri & Ticaret AS, which it bought for $826 million. Turkey is conveniently situated within easy reach of Central and Eastern Europe, the Middle East and Africa, much like Singapore is to East Asia. IHH hopes to develop their Turkish operation into another global healthcare hub, alongside Singapore and Malaysia.
The growth of private healthcare, especially in the developing world, is certainly a good thing, providing top medical services to those who can afford it, and easing some of the burden on national healthcare systems by providing an alternative source of treatment and the associated networks of training and development facilities. IHH owns a private medical university and a nursing training centre in Malaysia. Private healthcare is also the incubator for new healthcare technologies and techniques, as public sector healthcare often doesn’t have the budget or the staff to invest in much other than proven technologies and treatments.
There is a downside to this success story though. The draw of shiny new hospitals, new technology, a better working environment and higher salaries is proving to be too much for many healthcare professionals to resist, and is causing a slow but steady exodus from the public health systems all over the world, from the poorest and most underdeveloped, to the wealthiest and most advanced, basically without exception. Patients in private healthcare enjoy the luxury of not having to wait for treatment, of being treated by doctors who are well paid, have had enough sleep and who have enough time in their day to carefully consider a patient’s diagnosis and treatment.
The state of public health services is not quite so utopian. Even in somewhere as developed as Hong Kong, the public Health Authority struggles to find staff, and is left with no choice but to require the staff it does have to work unsustainably long hours for pay which is well below the equivalent in the private sector. This situation is not only making it difficult to convince new personnel to work in the public sector, but also creates an environment that is prone to mistakes and accidents.
President of the Hong Kong Doctors Union Henry Yeung Chiu-fat said many young doctors nowadays want easier jobs. Their preference for less stressful fields has exacerbated staffing problems. For example, becoming an ophthalmologist (eye doctor) is much more competitive with less-demanding on-call work than internal medicine or emergency room jobs.
Public hospitals In Malaysia, Thailand, China, India, UAE, South Africa, Australia, and even Europe have all been struggling with this issue, with some areas being so short of staff that they are having to close departments when a particular specialist is away for any reason.
While some of the problem can be alleviated by increased salaries and reform of health departments to be able to offer more flexibility to staff, there is another factor brought on by the rise in private medical services which could make the brain drain even worse.
The option for overseas treatment offered by a growing number of private medical insurance companies, as well as the relatively cheaper cost of treatment in developing countries, has created a massive growth in medical tourism. This lucrative market requires staff who are not only medically qualified, but who are also multi-lingual and culturally sensitive. This is a relatively unique demand of the private sector, since public sector hospitals treat a relatively small percentage of foreign language speakers.
This begs the question: If the unprecedented growth in international private health services continues, which it probably will (IHH alone are building 17 new hospitals), and the private sector continues to draw in much of the top talent in the medical industry, how will the public health services maintain a high standard of care, with fewer experienced personnel and many young doctors looking elsewhere for employment?
The crisis is very real, and there needs to be some serious thinking done on the part of the public health systems, especially those of developing countries. Stop gap measures will only work for so long, as human doctors and nurses will get tired and frustrated which can lead to them making potentially serious mistakes or quitting.
In China the problem is just as real, although slightly different. The private sector is still very small in comparison to public health system, instead, the problem China faces has to do with the urban – rural divide. China has recently spent more than USD 100 billion to try and bridge this gap, providing health insurance cover to 98% of rural Chinese, and ensuring access to improved primary healthcare facilities in a massive investment in rural infrastructure. While a large proportion of the rural population now have access to modern medical facilities, and are now more able to afford it, the State has still not been able to convince doctors and nursing staff to choose to work in more rural locations. Any career minded doctor in China would choose to work in one of the top tier city hospitals, where their case load will give them more interesting work with increased opportunity for career advancement, and where there are more opportunities for generating secondary income with some private practise on the side. In Shanghai alone 9 new hospitals are being built, which will all need to be staffed. A position in the rural areas is definitely not on the average Chinese doctor’s wish list, and the State faces some serious challenges in encouraging doctors to fill rural postings.
Unless creative solutions can be put in place, it seems that staffing issues in the public sector only going to increase around the world. With so many nations now facing economic turmoil, a significant increase in public health spending is not going to be easily managed. While investing more money into public health spending and salaries may alleviate the problem, other factors are involved in many cases.
What is certain is that all this bodes very well for the private healthcare industry. Being able to obtain first class medical care is going to become more dependent on whether patients are covered by private health insurance, and the public systems could decide, as the NHS in the UK and the Health Services Executive in Ireland have, to use the private sector to take some of the burden of healthcare off of public sector facilities. Add to all these factors the ageing world population, and it looks like the ideal environment for further growth in the private healthcare industry.
The largest challenge facing private healthcare providers may end up being that of finding and keeping their staff. Inevitable rises in salaries due to industry competition, are sure to be a major factor in the profitability and affordability of private healthcare. However, medical care will still be a necessity for everyone, and with a growing middle class in many developing parts of the world, an increasing number of people will be willing and able to pay for quality care.
There is to be a vigorous shake up of the Slovak private health insurance industry. So vigorous in fact, that it’s actually going to disappear altogether.
The Slovak government has reached a decision this week that it wants to bring all health insurance under a single state run system. A move the government feels will save the Slovak state some money by stopping the flow of precious state funds into private corporation’s profits and channeling them back into the system instead.
Prime Minister Robert Fico has charged the Slovak health care ministry to work out a plan of action by the end of September. The process is currently set to be completed by 2014, although Slovak officials do not expect the current insurers to go without a fight.
Slovakia can force a buyout of the two private health insurers, a move Fico said would have to be very carefully planned and executed to prevent any chances of backlash in the courts.
Fico has stated that, “”It would be ideal if we could reach an agreement on the buy-back.”
It appears that Fico is determined to see this measure implemented fully, regardless of opposition. “In case we will not reach an agreement, we will use the expropriation measure. This is a standard procedure written down in the constitution and known also elsewhere in Europe.” He added later that, “This (expropriation) is in the public interest.” However, the Prime Minister was not prepared to venture an estimate of the value of a buy-back or eventual nationalization, saying that the value would have to be determined by independent auditors.
The current health care system in Slovakia is a form of private-public partnership, where all Slovaks pay a healthcare tax of 14%, and can choose cover provided by one of the three providers, who provide cost-free treatment. The two private health insurers, Union, a unit of Dutch Achmea B.V., and Dovera, controlled by Slovak-Czech private equity group Penta Investments, provide cover for about 1.8 million of a total 5.4 million Slovakians. The state owned General Health Insurance Company, or VsZP, provides cover for the remaining 3.6 million citizens.
Katarina Kafkova, head of the Slovak Association of Health Insurers, said on Wednesday that, “We don’t consider re-installation of a single health insurer is the best possible option,” and made it clear that investors were not interested in ending their operations in Slovakia.
Martin Danke, a spokeman for Penta Investments, stated that, “We’re taking the plan into consideration. We don’t know any details of how the government wants to carry it out. It still holds that we want to be active in the sector of health insurance long term. There have been no talks with representatives of the government about its plans.”
Achmea was very direct in its reply: “If necessary, Achmea will take all steps necessary to protect the business interests of Union,” adding that it was not interested in selling Union or its portfolio to the state.
It is quite understandable that the private investors would fight this reform. Q1 profit for the entire health insurance sector in 2011 was almost EUR 13.5 million (USD 16.5 million), from a gross aggregated revenue during the quarter of EUR 871.1 million (USD 1.1 billion). Dovera’s share of the profits was EUR 6.6 million (USD 8.1 million), down from EUR 10.9 million (USD 13.35 million) for the same period the year before, Union only posted a profit of EUR 400,000 (USD 490,000), for Q1 2011, compared to a small loss for Q1 2010. At the same time, EUR 7 million (USD 8.6 million) can go quite a long way when channeled back into the health service especially in light of the current state of EU finances.
This is not the first time Prime Minister Fico has taken on the private healthcare industry in an attempt to save his country money. He banned private insurers from making a profit during his previous stint as Prime Minister between 2006-2010. This was later overruled by the Slovak Constitutional Court.
While the Prime Minister obviously has noble intentions, the Slovak Health Care Ministry will have its work cut out for it. Firstly to successfully evict Union and Dovera without prolonged legal battles, and then to build the national health insurance service in such a way that it has the capacity to offer cover to all Slovaks, while remaining profitable. Public healthcare systems are notorious for effectively draining blood out of the healthiest economy, Slovakia’s General Health Insurance Company is currently on the right track, let’s hope it will stay that way. This is definitely a story that will not be over soon.
There have been a number of notable changes in International Private Medical Health Insurance in the last few weeks, while not as earth shattering as the Libor scandal or the crop failures in the US, the progressive and continual changes reveal an industry that is currently very dynamic and competitive. While Bupa is launching products to fill gaps it sees in the IPMI market, US healthcare giant UnitedHealth Group is steadily working to increase the scope and quality of their international healthcare cover. Medicare International has been tuning their products to keep them competitive, and have made efforts to keep premium increases down to a minimum.
Bupa, one of the world’s largest insurers, has recently announced a new range of international private medical insurance products called Bupa Flex. Until now, international health insurance policies were only available for a minimum of one year, but Bupa Flex aims to provide the benefits of traditional long term international medical cover without the usual 12 month minimum duration. It is aimed at international travellers and expats who are planning to be abroad for a period of between 3 to 11 months. Now, people moving abroad for short term transfers can tailor the duration of their policy to their exact needs. It offers benefits above short term travel insurance because policyholders can increase the duration of their cover at any time, and even convert to long term health insurance without a loss of or break in cover.
An innovative aspect of Bupa Flex is that it is managed online. Bupa has created a secure online portal called Membersworld, through which subscribers can manage almost every aspect of their insurance cover. The portal allows clients to access their policy documentation, request pre-authorisation for planned treatments, submit claims and access live 24 hour webchat with experienced advisors. The service also uses email and SMS alerts to notify members of the status of their claims, or to alert them that there are documents online which require their attention.
Bupa Flex comes in two flavours; Bupa Flex and Bupa Flex Plus. The basic plan covers inpatient and day care treatment, local air and road ambulances costs, and outpatient surgical operations. Bupa Plus adds a full range of out-patient coverage as well. Because of the short term nature of the products, there are no options to add maternity, newborn care or cancer benefits. Both plans have a total limit of GBP1 million (USD 1.7 million) and do not offer cover in the United States.
NIB and Unitedhealthcare International Join Forces in Australia
NIB, Australia’s fifth largest health insurer, and UnitedHealthcare, based in Minnesota, have signed a strategic partnership whereby NIB will support UnitedHealthcare’s international health insurance members in Australia. The deal gives UnitedHealthcare International customers access to NIB’s network of healthcare providers in Australia, which includes more than 500 hospitals. It extends UnitedHealthcare’s customers direct settlement options at a wider range of healthcare facilities in Australia, like dentists and opticians.
UnitedHealthcare sells international expat medical insurance, under their Global Solutions brand, to employers with employees based internationally. “UnitedHealthcare International’s clients are benefiting from our expanding global health care network, providing their employees with seamless access to high quality health care. A growing number of our clients have operations in Australia, and they now will have access to top hospitals and care providers there,” said Simon Stevens, president of Global Health at the UnitedHealth Group.
The company recently set up a similar alliance with Dubai-based Al Sagr National Insurance Company, to expand their Global Solutions coverage to seven countries in the Middle East. Through this alliance, UnitedHealthcare members have access to local services in the Kingdom of Saudi Arabia, UAE, Jordan, Qatar, Oman, Bahrain, Lebanon and Kuwait.
NIB currently provide healthcare cover in Australia to about 20,000 international customers, and are aggressively working to position themselves for expansion into the international healthcare market. “We have a view that increasingly people will need global health insurance cover and that if we don’t have an involvement in this phenomenon we could be missing an enormous opportunity,” said Mark Fitzgibbon, CEO of NIB.
UnitedHealth Group serves 75 million people worldwide through its family of US and international health and well-being businesses and are the market leaders in supporting employers with international workforces.
While there is no reciprocal agreement in place for NIB customers in the USA, NIB may be hoping to expand their international healthcare coverage through partnerships of this kind.
Medicare improves international health cover
Medicare International has made a number of improvements to its international health insurance products.
Organ transplantation and HIV/AIDS benefits will now be included in their International and International Plus policies at no extra cost, with the transplantation benefit carrying a limit of USD 170,000 for the International, International Plus and Executive plans which rises to USD 340,000 with the Executive Plus plan. The HIV/AIDS benefit will be subject to a two year waiting period, and will have a lifetime limit of USD 17,000 across all plans.
Maternity and complicated or abnormal pregnancy cover available on the Executive and Executive Plus packages will no longer be subject to an excess of 20% and 30% respectively. and the 20% co-payment on newborn care has been scrapped. The reduction in out-of-pocket expenses may be a welcome change, as simplifying and streamlining the process at a stressful time may increase the perceived value to policyholders.
Claims are also no longer subject to a USD 5100 limit for group and individual claims, but claims are now fully recoverable and without any cap, subject to the policy limits of USD 1.7 million per annum.
Price rises for 2012 have also been well below the expected annual medical inflation rate of 12-14%, with an average increase of 8% for individual plans and just 5% for group policies. With the current state of the economy, it is a welcome change to see policies undergo significant improvement while still keeping premium increases in check.
The competitiveness of the International Health Insurance market, the rising demand and scope for growth into developing parts of the world, like East Asia, are keeping insurers on their toes. We can expect a continuing stream of innovative products and new solutions as insurers contend for market share.
As the European financial situation becomes more uncertain with each day passing, Vhi Healthcare, Ireland’s largest health insurance company must raise €300 million (US $368.55 million) which could affect the premiums of over 2.2 million Vhi policyholders.
Vhi, short for Voluntary Health Insurance, is generally referred to as “The VHI” by residents of Ireland and is traded under the brand Vhi Healthcare. With headquarters in Dublin, Ireland, VHI is a state-controlled corporation which has been accused of being given preferential treatment above its primary competitors. It is regulated by the Health Insurance Authority which is the private health insurance regulatory board, monitoring activities in Ireland.
The issue at hand is that Vhi Heathcare is guaranteed by the State, meaning that it is not required to keep specific reserve amounts on hand in the event there is a spike in the number of claims. In addition to the guarantee, it cannot be declared bankrupt.
Competition experts and analysts say that preferential treatment towards Vhi needs to end in order to restore balance to the private healthcare market.
The preferred status for Vhi has allowed to it borrow funds at advantageous rates, in addition to the lack of need to keep a reserve balance. Lenders are happy to oblige to Vhi’s requests as the loans were essentially risk free due to the fact that the government would pick up the bill if Vhi defaults. However, the likelihood of Vhi defaulting and going bankrupt is almost impossible as it is a statutory body.
The European Commission has called for an end to the preferred status of the company, and has proposed that the government end the guarantee by the end of 2013. Vhi Healthcare was receptive to the proposal; however it made note that a risk-equalization plan will need to be implemented.
Initially, there had been plans to privatize Vhi Healthcare back in 2010. However, the new coalition government decided to retain Vhi when it entered office, making it a pillar of the universal health insurance system which is scheduled to be rolled out in 2016. Under this plan, all citizens will be required to purchase health insurance from an insurance provider, not exclusively Vhi, and the government would provide a subsidy of some sort for those who meet the low income criteria.
Currently, Vhi is required to raise €300 million (US $368.55 million) in capitalization and one of their options to do so include raising the premiums of its 2.2 million clients. This €300 million (US $368.55 million) is to increase the solvency ratio of Vhi, ensuring the insurance company has enough money on hand to cover any unexpected spike in claims. Should Vhi decide this is the best way for it to raise capital, clients of Vhi can expect to see their premiums to be raised by up to €135 (US $165.85) this year. Moving forward, Vhi will have to retain 40 cents to the euro in income to safeguard itself as per regulations.
Meanwhile, competitors welcomed and encouraged the move to abolish the guarantees and preferential treatment for Vhi. Specifically, Aviva stated that the clients of Vhi should not be negatively affected by the increase in premiums due to an external cause from the government. Aviva called on the government to provide more details as to how it plans to handle the solvency requirements of Aviva.
In related news, the government of Ireland has recently hired a new CEO for Vhi. The coalition government, however, breached the salary limitations which are imposed on maximum salary limits for new CEO’s of Vhi. Vhi’s new chief is John O’Dwyer, and his annual income will be €238,727 (US $293,276.12); this represents almost €50,000 (US $61,425) more than the limit.
Despite the limits in place, Minister Brendan Howlin stated the need for exceptions in specific cases, especially in the case of Vhi due to some of the substantial changes that are about to take place.
This comes at a time full of volatility for the European financial industry. With Euro prices falling and shrinking, or failing, economies, Vhi’s deregulation will need to be handled with care. If safeguards are not in place, many individuals who hold policies may no longer be able to afford their current plans. If they choose to move away from their current plans, they may not receive adequate coverage as competitors may not want to offer the same plan for the same price, which could cause greater uncertainty into the lead up to the introduction of the universal health insurance system.
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A report released on Monday by the Healthcare Reform Office in China announced that the 3 year plan to improve some of the fundamental parts of China’s healthcare system completed its objectives on schedule. The Chinese Central Government spent almost US$71 billion between 2009 and 2011 in efforts to improve healthcare services to the public, build primary care medical facilities and new hospitals. Much of the effort was focused on extending coverage and providing medical services to the rural population, and the report claims that 95% of Chinese are now covered by public medical insurance.Read the rest of the Healthcare in China: The Overhaul that Underwhelmed article.