An empirical examination of risk equalisation in a regulated community rated health insurance market

Despite universal access entitlements to the public healthcare system in Ireland, over half the population is covered by voluntary private health insurance. The market operates on the basis of community rating, open enrolment and lifetime cover. A set of minimum benefits also exists, and two risk equalisation schemes have been put in place but neither was implemented. These schemes have proved highly controversial. To date, the debate has primarily consisted of qualitative arguments. This study adds a quantitative element by analysing a number of pertinent issues. A model of a community rated insurance market is developed, which shows that community rating can only be maintained in a competitive market if all insurers in the market have the same risk profile as the market overall. This has relevance to the Irish market in the aftermath of a Supreme Court decision to set aside risk equalisation. Two reasons why insurers’ risk profiles might differ are adverse selection and risk selection. Evidence is found of the existence of both forms of selection in the Irish market. A move from single rate community rating to lifetime community rating in Australia had significant consequences for take-up rates and the age profile of the insured population. A similar move has been proposed in Ireland. It is found that, although this might improve the stability of community rating in the short term, it would not negate the need for risk equalisation. If community rating were to collapse then risk rating might result. A comparison of the Irish, Australian and UK health insurance markets suggests that community rating encourages higher take-up among older consumers than risk rating. Analysis of Irish hospital discharge figures suggests that this yields significant savings for the Irish public healthcare system. This thesis has implications for government policy towards private health insurance in Ireland.

The inter-rater reliability of the Risk Instrument for Screening in the Community

Predicting risk of adverse healthcare outcomes is important to enable targeted delivery of interventions. The Risk Instrument for Screening in the Community (RISC), designed for use by public health nurses (PHNs), measures the one-year risk of hospitalisation, institutionalisation and death in community-dwelling older adults according to a five-point global risk score: from low (score 1,2), medium (3) and high (4,5). We examined the inter-rater reliability (IRR) of the RISC between student PHNs (n=32) and expert raters using six cases (two low, medium and high-risk), scored before and after RISC training. Correlations increased for each adverse outcome, statistically significantly for institutionalisation (r=0.72 to 0.80,p=0.04) and hospitalisation, (r=0.51 to 0.71,p<0.01) but not death. Training improved accuracy for low-risk but not all high-risk cases. Overall, the RISC showed good IRR, which increased after RISC training. That reliability reduced for some high-risk cases suggests that the training programme requires adjustment to further improve IRR.