Supplemental Private Medical Supplemental Private Medical Indemnity - - PowerPoint PPT Presentation

▶
supplemental private medical supplemental private medical
SMART_READER_LITE
LIVE PREVIEW

Supplemental Private Medical Supplemental Private Medical Indemnity - - PowerPoint PPT Presentation

Jan 21, 2024 246 likes •660 views

2nd Colloquium Supplemental Private Medical Supplemental Private Medical Indemnity Insurance Insurance Indemnity in Latin Latin America America in By Act. Eduardo Lara di Lauro Milliman Mxico Salud, S.A. de C.V.

slide-1
SLIDE 1

Supplemental Private Medical Supplemental Private Medical Indemnity Indemnity Insurance Insurance in in Latin Latin America America

By

  • Act. Eduardo Lara di Lauro

Milliman México Salud, S.A. de C.V. eduardo.lara@milliman.com Dresden, Germany – April 29, 2004.

2nd Colloquium

slide-2
SLIDE 2
  • I. General Overview /

Background

  • a. Economics &

Demographics

  • b. Statistical Data
  • II. Systems & Models
  • a. Private Healthcare
  • b. Insurance Sector
  • c. Health Insurance

Industry

  • III. Mexico Case
  • a. System & Participants
  • b. Supplemental Private

Medical Indemnity Insurance

  • IV. Trends / Challenges
  • a. Healthcare
  • b. Health Insurance
  • c. Opportunities for

Actuaries Final Comments

Supplemental Supplemental Private Private Medical Medical Indemnity Indemnity Insurance Insurance in in Latin Latin America America CONTENTS

slide-3
SLIDE 3

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Background

Where we are …

slide-4
SLIDE 4

World’s Share

(1)Population 2000

515 M 8%

(1)Territory

20.5 M 14%

(sq Km)

GDP 2000 2.0 Trillions 6%

(1) Free Trade Market +10 Trillions in GDP

(+20 Bilateral agreements) (1998)

(2) USA Trade with LA +200 B (2) Exports to USA +100 B

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Economics & Demographics

Sources (1) World Bank; (2) USA Dept. of Commerce 1995

slide-5
SLIDE 5

GDP Growth: From 1% (1981 - 1990) to +3% (1991 - 2000) Foreign Investment: From less than 11B to 53B (1994 -1999) to 75B (2000) <1990 2000-Year Brazil 1B to 33B Mexico 4B to 13B Argentina 2B to 12B Chile 0.7B to 4B Colombia 0.4B to 2B Venezuela 1.7B to 4B Peru

  • 7M to

0.7B Inflation Rate: Under Control – Between 10 - 3% in most countries.

Economy/Tax Reforms still to come to ensure sustained growth and employment and consequently more access to Health Services and Insurance.

Sources World Bank 2001

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Economics & Demographics
slide-6
SLIDE 6

Concept Concept/ /Year Year 80 80 -

  • 85 90

85 90 -

  • 95

95 V% V% 95 95 -

  • 00

00 V% V% Crude Birth Rate%o 30.9 25.9 (16) 22.9 (12) Crude Death Rate%o 7.9 6.9 (13) 6.4 (7) Urban Population % 65.1 74.3 14 75.3 1 Life Expectancy (years) 65.0 68.0 8 69.8 3 Infant Mortality %o 59.0 43.0 (27) 35.5 (17) Polio, DPT, BCG Vaccine % 59.4 87.5 47 89.3(1) 2

Sources PAHO 1998 & 2000; WHO 1998 (1) Aggregated

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Economics & Demographics
slide-7
SLIDE 7

HEALTH EXPENDITURE AS % OF GDP Public (1990 - 1998)

Sources World Bank 2001

Private (1990 - 1998)

3.2 2.6 1.9 1.7 3.3 3.0 2.8 2.4

Latin America World Developing Countries Asia Pacific Latin America World Developing Countries Asia Pacific

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Economics & Demographics
slide-8
SLIDE 8

6.5 5.6 4.7 4.1 $452 $561 $179 $151

Latin America World Developing Countries Asia Pacific LatinAmerica World Developing Countries Asia Pacific

HEALTH EXPENDITURE AS % OF GDP Total (1990 - 1998) HEALTH EXPENDITURE Per Capita $ (1990 - 1998)

Sources World Bank 2001

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Economics & Demographics
slide-9
SLIDE 9

1.6 1.5 1.2 1.5

Physicians per 1000 people Hospital Beds per 1000 people In-patient admission rate as % population

2.2 3.3 2.5 2.5 2% 9% 7% 4% Latin America World Asia Pacific Developing Countries

Sources World Bank 2001

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Health Services (1990 - 1998)
slide-10
SLIDE 10

Sources: (1) Swiss Re./Sigma 6 2001 (2) ASSAL 2000

LA Market is the fastest growing in the world

Regional CAGR (1990 - 1999) North America 5.0% Latin America 12.1% Western Europe 9.0% East Asia 11.0%

(1)

Market penetration still low Enormous potential

(2)

  • Life Insurance Market from 0.5% of

GDP (80’S) to above 2.0%* (90’S).

Chile Col. Brz. Arg. Ven. Mex. Latin America Spain Europe US Japan 4.0% 2.1% 2.0% 1.9% 1.9%

8.8% 10.9% 8.2% 6.7%

2.3% 2.05%

World 7.8% World total 5.0%

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Insurance Sector
slide-11
SLIDE 11

Size: US$ 39 Billions (1)

Premium (2) L/R (3)

(Share)

Life 26% 66% Pension 15% 77% Health 12% 63% Non Life 47% 51%

Drivers: Bancassurance, Pension & Health Reform, Mandatory Insurance, Consolidation, Privatizations

Sources: ASSAL 2000 (1) Incl. 18 countries. Estimated for Bol., Col., C.R, Cuba, Ec. D.R (2) Incl. 10 countries; (3) Incl. 9 countries (excl. Argentina) (4) Based on Mexico data (AMIS & CNSyF 2000)

Population covered (4) Equivalent to Life: 35% of SS population and 19% of country population Health: 6% of SS population and 3.2% of country population

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Insurance Sector
slide-12
SLIDE 12

Existing Existing Products Products: Major Medical Great variation - country to country. E.g. Mexico MME means + 90%; Colombia & Peru mean less than 10% HMO Type Great variation - country to country. E.g Colombia HMO means + 90%; Mexico less than 8% Critical Illness In its infancy, as rider to life policies and few stand alone known as “High Cost Illness” LTC Unknown – Poor infrastructure Trigger for recent product development and future growth is Pension Social Security Reforms: Health Workmen’s Comp.

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • I. General Overview / Health Insurance Sector
slide-13
SLIDE 13

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • II. Systems & Models
  • a. Healthcare Delivery Systems
  • b. Private Health Insurance
  • MCOs

Examples:

  • Argentina
  • Chile
  • Colombia
  • Brazil
slide-14
SLIDE 14

Importance of Latin America Importance of Latin America In 1999, ten countries have adopted some SS scheme with public & private mix. Eight of them are in LA. SS schemes are dominant in LA. Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • II. Systems & Models
slide-15
SLIDE 15

Countries with Social Security

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • II. Systems & Models

# of Countries 33 44 58 97 123 135 167 189 Year 1940 1949 1958 1969 1979 1989 1999 2000

slide-16
SLIDE 16

MODEL FEATURES COUNTRY BISMARK Financing Through SS Argentina Mix Delivery Public & Private Brasil Equity - Universal Coverage Chile Colombia Ecuador Mexico Peru Uruguay Venezuela SHEMASHKO Exclusively Public Financing Cuba & Delivery, there is no private sector.

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • II. Systems & Models
slide-17
SLIDE 17

Although there is a public health sector in each country, their mix and participation determ the development of private private health health insurance insurance products products.

Thus, we could find: Substitute products, where the membership is voluntary. Complementary products, where the public coverage is not comprehensive or with deficiencies. Double coverage, where the public coverage is mandatory but the people wants to pay private insurance with same coverage.

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • II. Systems & Models
slide-18
SLIDE 18

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • II. Systems & Models

COUNTRY SYSTEM COVERAGE Argentina Mandatory health insurance Comprehensive through private health insurance Coverage companies (Obras Sociales), which also offer “Complementary Coverage”. Brazil Mandatory Federal SS Universal through governmental Coverage infrastructure. Private insurers (4 types) offers “Double Coverage-payment”.

slide-19
SLIDE 19

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • II. Systems & Models

COUNTRY SYSTEM COVERAGE Chile Mandatory health insurance. People Comprehensive have to opt for the State System Coverage (FONASA ) or private health insurance companies (ISAPRES), which also offer “Complementary Coverage”. Colombia Mandatory health insurance Comprehensive through private health insurance Coverage companies (EPS). Private insurers offer “Complementary Coverage”

slide-20
SLIDE 20

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • II. Systems & Models

COUNTRY PRIVATE PUBLIC Argentina Obras Sociales Super Intendencia Brazil Operadoes, Ins Cos. SSS, ANS Chile ISAPRES FONASA Colombia EPS Super Intendencia O R G A N I Z A T I O N

slide-21
SLIDE 21

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case
  • a. System & Participants
  • b. Private Insurance Market
  • c. Supplemental Private

Medical Indemnity Insurance

  • d. Products & Coverage
slide-22
SLIDE 22

Modulation Financing Delivery Medium Classes Poor Non Insured Insured SOCIAL GROUPS

FUNCTIONS

Private Sector Social Security Health Ministry

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case

Current Current Mexican Mexican Healthcare Healthcare Model Model

slide-23
SLIDE 23

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – System & Participants

System Financing Operation Delivery Users Social Security

  • Fed. Govern.
  • Fed. Taxes

Employers

Payroll Taxes

Employees

Payroll Taxes

Public Hospitals & Clinics Salary Physicians

Army / Navy PEMEX / CFE ISSSTE

IMSS

Salary Workers

Workers

Beneficiaries

Retirees

Welfare Private

Fed. Govern

  • Gral. Taxes

Copay- ments Ministry of Health

Public Hospitals & Clinics Salary Physicians

Employers

Direct Paymt

Individuals

Out-of-Pocket

Indemnity Insurance

Prepaid Medicine Open Population

High & Medium Income

Private Hospitals & Clinics Fee for Service

Poor Rural Comm. Informal Sector Self

slide-24
SLIDE 24

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – System & Participants

System Financing Operation Delivery Users Social Security

  • Fed. Govern.
  • Fed. Taxes

Employers

Payroll Taxes

Employees

Payroll Taxes

Public Hospitals & Clinics Salary Physicians

Army / Navy PEMEX / CFE ISSSTE

IMSS

Salary Workers

Workers

Beneficiaries

Retirees

Welfare Private

Fed. Govern

  • Gral. Taxes

Copay- ments Ministry of Health

Public Hospitals & Clinics Salary Physicians

Employers

Direct Paymt

Individuals

Out-of-Pocket

Indemnity Insurance

Prepaid Medicine Open Population

High & Medium Income

Private Hospitals & Clinics Fee for Service

Poor Rural Comm. Informal Sector Self

IMSS 45 Millions ISSSTE 8 Millions Army/Navy 1 Million Pemex/CFE 1 Million TOTAL 55 Millions

SSA 45 Millions Pop In 1 Million No Acc 2 Million TOTAL 48 Million

Self Fund 1.5 Mill Ins Co. 3.5 Mill Total 5 Millions (Double Pay 2 Millions)

slide-25
SLIDE 25

System Financing Operation Delivery Users Social Security Pop Insurance Private

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – NHP 2000-2006
  • Fed. Govern.
  • Fed. Taxes

Employers

Payroll Taxes

Employees

Payroll Taxes

Public Hospitals & Clinics Salary Physicians

Army / Navy PEMEX / CFE ISSSTE

IMSS

Salary Workers

Workers

Beneficiaries

Retirees

Fed. Govern

  • Gral. Taxes

Copay- ments Ministry of Health

Public Hospitals & Clinics Salary Physicians

Poor Rural Comm. Informal Sector Self

Employers

Direct Paymt

Individuals

Out-of-Pocket

Indemnity Insurance

Prepaid Medicine Open Population

High & Medium Income

Private Hospitals & Clinics Fee for Service

slide-26
SLIDE 26

Financing

Delivery

Popular Health I nsurance

I MSS

I SSSTE

“Financial Protection Health Fund”

“Maternity and Sickness Fund” “Medical Benefits Fund” I MSS I nfrastructure I SSSTE I nfrastructure PROPOSAL Phase IIa: Universal Health System (Plural & Democratic)

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – Universal Health System

Ministry of Health I nfrastructure

Private Sector

Private I nsurance I SES Private Healthcare Services

System

slide-27
SLIDE 27

Health Ministry IMSS-Solidaridad Popular Insurance

Population in millions

Social Security IMSS & ISSSTE PEMEX & ISSSTEFAM 3.5 3.5

INFORMAL SECTOR INFORMAL SECTOR FORMAL SECTOR FORMAL SECTOR

Private Health Expenditures, 3% of GDP Private Health Expenditures, 3% of GDP Equivalent to $15 billion USD Equivalent to $15 billion USD (With growing trend) (With growing trend)

55 55 46 46 2 2

No Access to Services

Uninsured Population Uninsured Population Insured Population Insured Population

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – Private Insurance
  • vs. Public System

Source: HealthMinistry2000.

Private Health Private Health Insurance Insurance Market Market

slide-28
SLIDE 28

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – Private Insurance
  • vs. Public Coverage

BENEFIT Social Popular Major

Comprehensive

Security Insurance Medical Health Preventive and Health Maintenance

  • PCP Office Visits
  • Specialist Office Visits
  • some

some

  • In-Patient Hospital Expenditures
  • Out-patient Hospital Expenditures
  • some
  • In-Patient Ancillary Service
  • Out-patient Ancillary Services
  • some
  • In-Patient Drugs Expenditures
  • Out-patient Drugs Expenditures
  • some

some

  • Pregnancy
  • Maternity
  • limited
  • Primary Care Dental
  • Rehabilitation and Therapy Services
  • some
  • Emergency Services
  • Vision Benefits

some

  • some

Maximum Benefit Unlimited Unlimited Dif Options Dif Options Co-payments No Yes Yes Yes Exclusions No Yes Yes Yes Waiting periods No No Yes Yes Own Infrastructure Yes Yes No Perhaps Closed/Open Provider Network Close Close Close/Open Close/Open Abroad Coverage No No Yes Yes PRIVATE PUBLIC

slide-29
SLIDE 29

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – Health Insurance

by Coverage

SPECIFIC ILLNESS SPECIFIC ILLNESS.- Dread Disease (cancer, diabetes, hipertension, etc.), Maternity, others. MINOR MEDICAL MINOR MEDICAL.- PCP Office Visits, Out-Patient: Rx,

  • lab. & prescription drugs, etc.

HOSPITAL ONLY. HOSPITAL ONLY. MAJOR MEDICAL. MAJOR MEDICAL. MIX MIX.- From the above. COMPREHENSIVE HEALTH. COMPREHENSIVE HEALTH.-

  • ISES, Social Security

Substitute.

slide-30
SLIDE 30

FULL INSURED, SELF FULL INSURED, SELF FUNDED, ADMINISTRATIVE FUNDED, ADMINISTRATIVE SERVICE ONLY (ASO). SERVICE ONLY (ASO). SUBSIDY SUBSIDY.- Daily subsidy by illness or hospitalisation, etc. REIMBURSEMENT. REIMBURSEMENT. DELIVERY OF SERVICES DELIVERY OF SERVICES.- There is no reimbursement or cash benefits. (Prepagas, ISES, ISAPRES, HMOs) MIX MIX.- From the above.

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – Health Insurance

by Type of Indemnization

To To the the Beneficiary Beneficiary To To the the Provider Provider

FEE FOR SERVICE FEE FOR SERVICE SALARY SALARY BASIC BASIC CAPITATION CAPITATION MIX MIX

slide-31
SLIDE 31

Methodologies

INTEGRATION OF DISTRIBUTION FUNCTIONS &

MULTIPLE DECREMENT TABLES (Subsidy, Dread Disease and Indemnity Plans).

STANDARD COMMUNITY RATING (Delivery of

Services and Mix).

ADJUSTED COMMUNITY RATING (Delivery of Services

and Mix).

EXPERIENCE RATING (Delivery of Services and Mix)

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – Health Insurance

Product Rating Pricing

slide-32
SLIDE 32

INDEMNITY MAJOR MEDICAL

sP(E)x=sqxf (1-co)

Where:

sP(E)= Net rate for the interval of central edge x, gender s, correspondent to

event E. SA = Maximum Benefit.

D

= Deductible. co = Coinsurance. LI = SA + d 1 – co

sqx

= Morbidity Rate for the central edge x and gender s. f = Aplicable Factor to morbidity rate as function of event. f = .88 for Illness. f = .12 for Accident.

f(s) = c * e-c * s ;c

= 1___ SinP(E) SinP(E) = Average Claim by event E e = 2.718281

       

∫ ∫ − + −

∞ LI d LI

ds s f co SA ds s f d SA ) ( ) 1 /( ) ( ) (

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – MM Health Insurance

Pricing Example

slide-33
SLIDE 33

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – Comprehensive Health

Standard Community Rating Example

0.24 0.24 950 3 Ambulance 8.40 8.40 1,550 65 Pharmacy & Blood 6.29 75% 25.16 550 549 ER 28.81 47.69 OUTPATIENT 32.09 10% 35.66 3,855 111 Testing 45.60 10% 50.67 12,160 50 Medical 4.78 9.11 15.56 12.26 87.99 193.51 NET COST 9.11 3,215 34 Surgery 10% 13.63 27,250 6 ICU 215.01 INPATIENT 4.78 1,275 45 Testing 10% 17.29 1,715 121 Pharmacy & Blood 10% 97.77 13,485 87 Surgical COPAY pm/pm AVERAGE COST UNITS PER THOUSAND TYPE OF SERVICE

slide-34
SLIDE 34

NET COST COPAY pm/pm AVERAGE COST UNITS PER THOUSAND TYPE OF SERVICE 679.52 807.46

RISK RATE

19.81 19.81 255 932

Other Servives

69.75 10% 77.50 289 3,218.00

Outpatient Testing

53.87 20% 67.34 150 5,387

PCP Office Visists

9.18 10% 9.18 2,160 51

Outpatient Surgery

65.38 173.40 25.66 9.65 30.50 128.87 25% 231.20 389 7,132.00

Outpatient Drugs

10% 9.65 3,510 33

InpatientVisits

150.89

Physician Fees

65.38 215 3649

Health Maintenance Prgs.

25% 34.22 200 ,2053

Specialist Office Visits

10% 30.50 5,155 71

InpatientSurgery

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – Comprehensive Health

Standard Community Rating Example

slide-35
SLIDE 35

100.00% 944.52 (pm/pm) 3% 2% 12% 13% 70% Total % pm/pm 19.00 PROFIT 113.50 ACQUISITION COST 679.52 RISK RATE (CLAIM COST) 9.50 REINSURANCE 123.00 ADMINISTRATIVE COST NET COST

RATE DEVELOPMENT

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • III. Mexico Case – Comprehensive Health

Standard Community Rating Example

slide-36
SLIDE 36

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • IV. Trends - Challenges
  • a. Healthcare
  • b. Health Insurance
slide-37
SLIDE 37

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • IV. Trends

More Hybrids Combination of MME + some first dollar expenses More Regulation coming Self Insurance & Provider XS development

MME (up to now) MME extended (incl. Pregnancy + some ambulatory) EPO

What has been the Evolution?

HMO Self Insurance LTC, PXS Far away, however recent developments in Brazil, Argentina and Mexico

Full Capitalized Companies since the beginning Reasonable deductibles (Insurance & Reinsurance) Balanced Managed care True Health delivery vs. legal pressure

Med Mal

slide-38
SLIDE 38

OWN STATISTICS (Complete, Reliable, Sufficient, By Region, etc.) SPECIFIC TABLES (Morbidity, Disability, Activity). RESERVE SCHEMES (Ad-hoc Claim Reserves) INFORMATION SYSTEMS (Utilization Trends, Diagnostics,

Treatments, Procedures, Control, Forecast, Benchmarking, etc.)

UNIFORM CODING (Diagnostics, Treatments- Procedures, Billing) TOOLS (Evaluation, Cost Ctrl, Qlty Assurance, Performance Measures) CARE GUIDELINES (Protocols and Standards). ACTUARIAL TECHNIQUES & TOOLS (Health Insurance

Models and Methodologies in training programs)

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • IV. Challenges
slide-39
SLIDE 39

SPECIAL POPULATIONS SPECIAL POPULATIONS ELDERLY CHRONIC ILLNESS CATASTROPHIC TREATMENTS DISABILITY CONDITIONS LOW INCOME - POOR - INDIGENTS

Indemnity Indemnity Insurance Insurance in in Latin Latin America America

  • IV. Challenges
slide-40
SLIDE 40

Thank you!

2nd 2nd Colloquium Colloquium – – Dresden, Germany Dresden, Germany April April 29, 2004 29, 2004

International Association of Actuaries Health Section

  • Act. Eduardo Lara di Lauro

eduardo.lara@milliman.com