health ins mkt

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Healthcare Insurance MarketHealthcare Insurance Market

ChapterChapter -- 11


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Definitions of Health insuranceDefinitions of Health insurance

Insurance providing for the payment ofInsurance providing for the payment ofbenefits as a result of sickness or injury.benefits as a result of sickness or injury.

Includes various types of insurance, suchIncludes various types of insurance, suchas accident insurance, disability incomeas accident insurance, disability incomereplacement insurance, medical expensereplacement insurance, medical expense

insurance, and accidental death andinsurance, and accidental death anddismemberment ( Removal of limbs bydismemberment ( Removal of limbs bycuttings) insurance .cuttings) insurance .


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Definitions of Health insuranceDefinitions of Health insurance

Health insurance like other forms ofHealth insurance like other forms of

insurance is a form of collectivism byinsurance is a form of collectivism by

means of which people collectively poolmeans of which people collectively pool

their risk, in this case the risk of incurringtheir risk, in this case the risk of incurringmedical expenses.medical expenses.


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Healthcare InsuranceHealthcare Insurance

The main drivers in the healthcare marketThe main drivers in the healthcare marketis the ageing population.is the ageing population.

There is no Universal Health CareThere is no Universal Health Careinsurance system adopted among theinsurance system adopted among thecountries.countries.

Different Countries have tried differentDifferent Countries have tried differentmodels according to their knowledge .models according to their knowledge .


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Health Insurance Policies


Long-term policies- generallyprovided by

life assurance companies Income protection insurance Critical illness insurance Long-term care insurance


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Health Insurance PoliciesShort-term policies - General insurance

companies

Accident, sickness and unemploymentinsurance

Private medical insurance Hospital cash plans


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National Health Service (NHS)National Health Service (NHS)--19481948

UK state system of healthcare.UK state system of healthcare.

Higher proportion of healthcare than otherHigher proportion of healthcare than othereconomically advanced countries.economically advanced countries.

For Healthcare Poor people depends onFor Healthcare Poor people depends on

Charities, Religious organizations, self helpCharities, Religious organizations, self helpor traditional health system.or traditional health system.


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National Health Service (NHS)National Health Service (NHS)--19481948

Trade Unions, Friendly Societies, SelfTrade Unions, Friendly Societies, Self--helphelpgroups provided Insurance againstgroups provided Insurance againstmedical risk.medical risk.

National Insurance ActNational Insurance Act--19111911

Provide national insurance against rangeProvide national insurance against rangeof risk of working people (Poor, Low paidof risk of working people (Poor, Low paidworkers).workers).


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NHS Act 1946, Came into effect in 1948.NHS Act 1946, Came into effect in 1948.CONCEPT OFNHSCONCEPT OFNHS

Hospitals were purchased by state.Hospitals were purchased by state. NHS employed hospital doctors, canNHS employed hospital doctors, can

practice privately.practice privately.

(GPs) General practioners contract(GPs) General practioners contractwith NHSwith NHS -- paid per patient.paid per patient.


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Free health treatment.Free health treatment. Services funded through general taxation.Services funded through general taxation.

NHS TodayNHS Today

Estimated cost 67 billion pound with 1.3 millionEstimated cost 67 billion pound with 1.3 millionEmployee.Employee.

Free access to Hospitals, GPS, and ClinicFree access to Hospitals, GPS, and Clinictreatment.treatment. Locally Managed primary care trust GPs.Locally Managed primary care trust GPs.


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Health And Ambulance Trusts.Health And Ambulance Trusts. Privately run Treatment centre work WithPrivately run Treatment centre work With

NHS at fixed price in order to ease theNHS at fixed price in order to ease the

burden of NHS.burden of NHS.

Private & overseas hospitalsPrivate & overseas hospitals -- helpful forhelpful for

patients who cant get treatment with in thepatients who cant get treatment with in thetime scale.time scale.


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Difference Between Private & Public sectorDifference Between Private & Public sector

Differences exist due to type of treatmentDifferences exist due to type of treatment

like emergency, Alternative medicines,like emergency, Alternative medicines,

Cosmetic Surgery.Cosmetic Surgery.

Private SectorPrivate Sector -- Treatment throughTreatment through

Technique & Technology,Technique & Technology,


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Certain Private HospitalsCertain Private Hospitals May not haveMay not haveIntensive care back up technology.Intensive care back up technology.

Choice of facilities,Choice of facilities, Private sectorPrivate sector--Complete choice ofComplete choice of

specialist,specialist,

Time spentTime spent--waiting to be treated (Waitingwaiting to be treated (WaitingList.),List.),


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Participants of Health Care InsuranceParticipants of Health Care Insurance

Market:Market:

Private Health Sector,Private Health Sector, Provident Insurers,Provident Insurers,

Commercial insurers,Commercial insurers,

Health and Dental Cash Plans,Health and Dental Cash Plans,


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Third Party Administrators and otherThird Party Administrators and otherProviders.Providers.


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Private Health SectorPrivate Health Sector--People (Cant waitPeople (Cant wait

NHS Facility) / willing to pay directly orNHS Facility) / willing to pay directly or

through Insurance.through Insurance.

Highly Specialized marketHighly Specialized market


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Advan. of Private Medical TreatmentAdvan. of Private Medical Treatment

Less time waitingLess time waiting Non urgent operationsNon urgent operationsLike hernia.Like hernia.

Choice of ConsultantChoice of Consultant operations oroperations orTreatment,Treatment,

Choice of admission dates / hospitals.Choice of admission dates / hospitals. Private Room Facility.Private Room Facility.


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Private Med. Ins. Policies dont coverPrivate Med. Ins. Policies dont cover::

Chronic (Long lasting) IllnessChronic (Long lasting) Illness-- asthma /asthma /Diabetes,Diabetes,

Normal pregnancy, Childbirth, Long termNormal pregnancy, Childbirth, Long termDisability or long term psychiatric illness,Disability or long term psychiatric illness,


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Cosmetic surgery / Therapies ( SomeCosmetic surgery / Therapies ( SomePolicies may offer).Policies may offer).

Provident InsurersProvident Insurers (FSMA(FSMA--2000) are :2000) are :

Non profit org. for the provision of MedicalNon profit org. for the provision of MedicalTreatment with No shareholders,Treatment with No shareholders,

Operating surpluses are part of theirOperating surpluses are part of theirreserves & so no corporation tax.reserves & so no corporation tax.


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No tax relief on Losses.No tax relief on Losses.Commercial insurers areCommercial insurers are ::

Operating in healthcare insurance market,Operating in healthcare insurance market, Profit making org. with shareholders,Profit making org. with shareholders, Pay dividends out of their taxed profit.Pay dividends out of their taxed profit.


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Health & Dental Cash Plans:Health & Dental Cash Plans:

Regional funds for working people,Regional funds for working people, Mutual org. run for the benefits of theirMutual org. run for the benefits of their

members,members,

Most of the healthcare problems areMost of the healthcare problems arerelatedrelated to Dental & optics.to Dental & optics.


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Third party Administrators & OtherThird party Administrators & Other

Providers:Providers:

Specialist health care Consultants,Specialist health care Consultants, Provide advice to corporate clients onProvide advice to corporate clients on

selecting Insurers and Cost containmentselecting Insurers and Cost containmentservices,services,

Employers run for their Employees,Employers run for their Employees,


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Provide a Full Claim administration services,Provide a Full Claim administration services, Paying claim on the behalf of employers.Paying claim on the behalf of employers.

Strengths of TPAs and Consultancies :Strengths of TPAs and Consultancies : IndependenceIndependence -- Like Brokers but not all,Like Brokers but not all, MotivationMotivation Rewarded for Cost Controlling,Rewarded for Cost Controlling,

FlexibilityFlexibility Tailored solution according to ClientTailored solution according to ClientRequirementsRequirements


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InformationInformation Retain all data of clientRetain all data of clientHealthcare insurance including ClaimsHealthcare insurance including Claims

details.details.


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Healthcare Trust & Self InsuranceHealthcare Trust & Self Insurance

Health TrustHealth Trust

Set up by Large org. due to Cost andSet up by Large org. due to Cost and

Administration.Administration.

Features of a Health TrustFeatures of a Health Trust

Not like an Insurance policy,Not like an Insurance policy, No tax applicable on the fund like IPT,No tax applicable on the fund like IPT, Trust Administered by Trustee or a TrustTrust Administered by Trustee or a Trust


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Healthcare TrustHealthcare Trust

Company,Company,

Health Trust is Funded by Employer,Health Trust is Funded by Employer, Trustees determines the EmployeesTrustees determines the Employees

Benefits,Benefits,

Limited Membership of the Trust,Limited Membership of the Trust,

Legal advice is necessary to setup a TrustLegal advice is necessary to setup a Trustbecause of the Complexity in Trust Law,because of the Complexity in Trust Law,


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Healthcare TrustHealthcare Trust

Employees receive benefits according toEmployees receive benefits according toTrust Rules,Trust Rules,

Employers Labiality may be limited byEmployers Labiality may be limited byarranging Stop Loss Insurance.arranging Stop Loss Insurance.


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Self InsuranceSelf Insurance


Payment of Healthcare treatment costPayment of Healthcare treatment cost

without Insurance by Employer orwithout Insurance by Employer or

Individuals.Individuals.

Why Self Insurance?Why Self Insurance?

Underestimation of Healthcare treatmentUnderestimation of Healthcare treatmentcost ,cost ,


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Low cost event may add number ofLow cost event may add number oftreatment & so increase the amounttreatment & so increase the amount

required for treatment,required for treatment,

Future treatments increase the Cost.Future treatments increase the Cost.


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TaxationTaxation

Tax is not usually applied to the person whoTax is not usually applied to the person who

received the benefits of medical treatment.received the benefits of medical treatment.

Value Added Tax (VAT) is not applied toValue Added Tax (VAT) is not applied to

Premium.Premium.

Insurance Premium tax (IPT) is applied onInsurance Premium tax (IPT) is applied on

Premium.Premium.


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Distribution ChannelsDistribution Channels

Categories of Medical Insurance MarketCategories of Medical Insurance Market

Individual paid,Individual paid, Company paid and,Company paid and,Voluntary employee paid groupsVoluntary employee paid groups

(Employees pay their premium).(Employees pay their premium).


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Two Main Dist. Methods for HealthcareTwo Main Dist. Methods for Healthcare

InsuranceInsurance

Direct sales (Including Telesales),Direct sales (Including Telesales),

Independent Intermediaries.Independent Intermediaries.


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Direct salesDirect sales

Mobile Sales ConsultantsMobile Sales Consultants -- Deals LargeDeals Large

Employers,Employers, Send mail to potential customers aboutSend mail to potential customers about

the product (Forms, Phone or Internet),the product (Forms, Phone or Internet),

Advertisement on Print & Electronic MediaAdvertisement on Print & Electronic Media WebsitesWebsites--Provide information about healthProvide information about healthproduct,product,


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Call CentresCall Centres -- Contact to potentialContact to potentialCustomers.Customers.

Advantages of Direct Sales:Advantages of Direct Sales:

ControlControl over Sales process with customers,over Sales process with customers,

DifferentiationDifferentiation Better service,Better service,

FeedbackFeedback from customers about Productfrom customers about Product

& Services.& Services.


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Disadvantages of Direct Sales :Disadvantages of Direct Sales :

Customers Limited InformationCustomers Limited Information ProductsProducts

available in the Health Insurance Market,available in the Health Insurance Market,

Loss of GoodwillLoss of Goodwill -- Commission base selling.Commission base selling.


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Independent intermediariesIndependent intermediaries

A ready made, experienced, and trustedA ready made, experienced, and trusted

channel of distribution for the Healthcarechannel of distribution for the Healthcare

Products to a large number of Individuals.Products to a large number of Individuals.

Cost effective for the Insurer due toCost effective for the Insurer due to

Advertisement expenses, Services & SalesAdvertisement expenses, Services & Sales

infrastructure.infrastructure.

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