Unlike the Coen brothers’ famous movie No Country for Old Men, it seems our world is increasingly becoming a place for elderly people, putting additional pressure on healthcare systems.Learn how Europe, Latin America and Asia are facing these challlenges through the insights of our experts.
The worryabout how healthcare models will be funded in the near future spans countriesand continents with a growing consciousness that public systems must besupported by private solutions. This inevitably draws attention to what is probablyone of the most complex political and social issues. To find out how theirregions are coping with these challenges and how they envision the future, FULLCOVERtalks to experts from Europe, Latin America and Asia – Ana Mota, MDS Portugal,Gustavo Quintão, MDS Brazil and Julie Lim, Acclaim Brokers, Singapore.
What is the role of the private and public sector in health protection? What services are provided by the State and the private sector?
Ana Mota (AM): In Europe, Docteur & Oxley1 and the OECD2 have identified three main healthcare funding models. They base their classification on a public and private financing criteria and the contractual relationship between healthcare service providers and payers. The models are:
- Public integrated – public financing and public healthcare providers (healthcare professionals are for the most part public sector employees)
- Public contract – combines public financing either through taxation or social security funds with private healthcare providers
- Private insurance/provider – public entities contracting private healthcare providers.
In most countries, public and private hospitals coexist in differing proportions. For instance, in northern Europe there are mostly public hospitals, whereas in the south, private services are growing.
The service provision is very similar in both sectors, with some care for cases like pandemics, organ transplant or other exceptions, exclusively provided by the State. Recently the private sector has
extended its range of services to areas that used to be exclusive to the public sector.
This trend is expected to continue and is a direct consequence of private health insurance development.
Gustavo Quintão (GQ): The south American continent has witnessed continual and many recent transformations ‑ namely social (including healthcare provision), political, economic and cultural. Quality universal healthcare for people is an aspiration all countries share, even though they face similar barriers to implementation: resource management, underfunding and significant demographic shifts. In Brazil we have the largest State‑funded health system in the world, a global example of free, universally‑accessed healthcare. The 1988 National Constitution established this single‑payer health system ‑
Sistema Único de Saúde (SUS) ‑ governed by principles of access for all, equity and the provision of a comprehensive service. It declared ‘everyone has a right to health and it is for the State to provide it’. Free enterprise can act through Saúde Suplementar (complementary health), which covers a quarter of the country’s population, about 50 million beneficiaries. Relying on private health plans does not
prevent you accessing SUS services.
Julie Lim (JL): Like many countries globally, the healthcare systems in Asia are disjointed and constantly plagued by issues such as: overcrowding in public hospitals, long waiting times (as the patient to healthcare worker/doctor ratio is much higher), highly inefficient and complicated systems and differences in geographical coverage where rural areas have access to only very basic medical facilities. As the population becomes more affluent, the imbalance between the ratio of healthcare workers/doctors at public and private hospital will continue to widen. That said, healthcare models in Asia are diverse in structure but are generally categorised as:
- Universal healthcare provided by public and private sectors
- Subsidised public healthcare for citizens
- Private healthcare offering first‑class services.
Healthcare funding also varies, typically from three main sources:
- National and local government
- Mandatory contributions from individuals (under social security legislation)
- Insurance (State or privately managed).
In Singapore, for instance, there’s an integrated public healthcare system offering timely, cost‑effective and seamless services for all residents with a subsidy for citizens and permanent residents. Services include: primary healthcare, hospitals, dental, mid to long term care and traditional Chinese medicine. Private hospitals and clinics mainly support residents and tourists from other countries.
In China, the public sector provides a fee‑based service with limits set by local health authorities. Reimbursement is made via a State‑managed insurance scheme with cost sharing and out‑of pocket expenditure for both primary and hospital services subject to maximum limits. The public healthcare infrastructure comprises township and community hospitals, plus village doctors and clinics in urban and rural areas. Private hospitals and clinics exist mainly in urban areas and private health insurance covers deductibles, co‑payments and other cost–sharing gaps. Indonesia has a different system, offering free healthcare supported by private hospitals and semi‑private pharmaceutical industries via a national universal insurance scheme that runs alongside private insurance plans.
How do they work together? Do they offer people alternative options and how do they support/complement each other?
How do they work together? Do they offer people alternative options and how do they support/complement each other?
AM: In general, citizens may choose one system or the other, so in most countries the system is complementary rather than alternative. There are, however, significant differences in the level of private sector support within each country, and access to this service is dependent upon having the money to buy private insurance.
If health protection is State provided, is there universal access and is it free? Are there costs involved?
AM: In Europe access tends to be universal, including models with higher co -payments than others. In northern Europe the system is almost totally free, while in southern countries co -payments are made in the public and private sectors (for health insurance).
Is health insurance based on a managed care system or is it still a reimbursement system? Do insurers have their own health units?
AM: In most countries there’s a managed care or mixed system. In some countries, such as Spain, insurers have their own health units and Portugal also tends to do this.
JL: Health insurance is still largely managed in two ways: through managed care and reimbursement systems. The managed care model is mainly used where low ‑cost insurance premiums are offered and medical care is closely monitored. The reimbursement system is commonly offered in employer ‑paid insurance programmes as it allows employees to seek treatments with their preferred medical professionals. Private insurers do not typically own health units or medical facilities. There are well established medical providers and hospital groups in the region offering world ‑class facilities and services. For example, Fullerton Healthcare headquartered in Singapore operates in four markets in Southeast Asia and Australia. The company offers primary care and has hospitals and clinics charging medical fees lower than general hospitals. KPJ Healthcare, a major healthcare facilities provider in Malaysia, treats patients with insurance in a ‘stable’ condition. Managing health units is not a core business activity for private insurers. They would rather partner with medical providers and offer consumers first ‑class services at controlled costs.
Looking to the future ‑ how are countries facing the ageing issue and tackling the healthcare costs associated with long‑term care provision?
AM: Europe is a rapidly ‑ageing continent, so this subject should be a top priority. Population ageing and rising medical costs, coupled with new medical technologies, pose great challenges for insurers and the community in general. This will most likely result in even more growth in private insurance sector solutions – particularly for long -term care - but these will only be sustainable if there’s some public sector contribution. So far there have been no significant developments in this area in most countries. In order to find a sustainable and efficient solution, there must be a political discussion involving all stakeholders.
GQ:Although it is a complementary scheme (when citizens enrol in a health plan,they don’t give up their right to public sector services), Brazil’s privatehealth cover hasincreasing support because, when its performance is compared to the publicsector, it has better quality, with shorter wait times and a superiorinfrastructure. Private healthcare, however, faces barriers of its own.Corporate health plans, which represent about 80% of this market, facedifficulties in offering continual medical assistance as a benefit, because due to inflation in the country, the costs justkeep growing (by 8 -10%). Yet health plans are among the most sought -afteremployee benefits, whichmeans companies should continue offering them.
JL: Given the size of Asia’s population, it’s not surprising healthcare’s considered the world’s fastest -growing market (fueled by the rapidly -ageing population and a growing affluent middle class) and Governments are either already adopting or looking into insurance plans to support a more integrated universal healthcare system. For any national healthcare insurance plan to be sustainable it will require public healthcare systems to have minimum standards for technical facilities and service delivery. This enables them to run alongside private healthcare services and avoids over -reliance on private healthcare facilities. As we know, the respective public and private sectors have very different goals making any alliance between both systems challenging.If health protection is State provided, is there universal access and is it free? Are there costs involved?
AM: In Europe access tends to be universal, including models with higher co -payments than others. In northern Europe the system is almost totally free, while in southern countries co -payments are made in the public and private sectors (for health insurance).
GQ: Brazil’s public system is funded solely and exclusively through general taxation. Payments into the public health system are made at a municipal, State and federal level and private health insurance is paid voluntarily by the policyholder (the insured, a legal representative or professional association).
Chile provides a south -American example that differs from Brazil. Chileans pay 7% of their income towards the healthcare system, and this allows them to choose between public and private services. Public services are provided through Fondo Nacional de Salud, ‘National Health Fund’ (FONASA) and private services through Instituciones de Salud Previsional, ‘Provident Health Institutions’ (ISAPREs). The latter replaces, not complements, the government -funded system and once you join the private system, you cannot access public services.
JL: It varies according to countries. In Malaysia for instance, universal healthcare is provided under a system of subsidised public care delivered through a network of primary clinics and hospitals. The government is the primary provider of public health services which are funded by citizen’s taxes. In Singapore all citizens and permanent residents are covered by the National Healthcare Insurance Scheme, which is paid for by their social security fund (and partly co ‑funded by employers’ contributions). China has a different system altogether as most healthcare facilities are provided by the public sector. Public hospitals are thus heavily ‑funded by the government. There is no free medical treatment except for life ‑saving accident and emergency. Health insurance is administered by the government with contributions made by both employee and employer. Citizens must pay an excess and contribute towards the cost of treatment.
What is your operating and financial healthcare model (ie hospitals and health centres vs home care and is it financed via tax, co‑payments etc)?
What is the role and importance of the insurance sector?
AM: Because of the differences in national health and social security systems, the role of private health insurance differs significantly between countries. In Europe it takes four basic forms:
JL: Insurers can take on a bigger role in this area; they should study and analyse what State healthcare services and funding are already available and develop insurance products to bridge the gaps in health cover. This eliminates wastage of government funding on national healthcare schemes, employers’ spending on corporate health insurance and consumers unnecessarily paying for healthcare services. JL: It varies according to countries. In Malaysia for instance, universal healthcare is provided under a system of subsidised public care delivered through a network of primary clinics and hospitals. The government is the primary provider of public health services which are funded by citizen’s taxes. In Singapore all citizens and permanent residents are covered by the National Healthcare Insurance Scheme, which is paid for by their social security fund (and partly co ‑funded by employers’ contributions). China has a different system altogether as most healthcare facilities are provided by the public sector. Public hospitals are thus heavily ‑funded by the government. There is no free medical treatment except for life ‑saving accident and emergency. Health insurance is administered by the government with contributions made by both employee and employer. Citizens must pay an excess and contribute towards the cost of treatment.
What is your operating and financial healthcare model (ie hospitals and health centres vs home care and is it financed via tax, co‑payments etc)?
AM: Again, models vary according to geography. In northern Europe it’s mainly home care financed by the public system while central and southern Europe is more supported by hospitals, medical centres, public and private clinics etc. As to financing, in the north it’s funded through tax/social security contributions whilst elsewhere it’s a mix between tax, social security, co ‑payments and private insurance.
GQ: Brazil’s public health system imposes no direct costs on users, as it’s funded through taxation. Access is free and universal. Private health funding varies by contract. You could be asked to pay a flat monthly fee, or be subject to moderating factors, such as co ‑payment models or pay ‑per ‑use so that each new treatment brings additional costs.
JL: In Asia, healthcare is delivered through properly licensed and recognised medical institutions. Home care is not common as there are various alternative solutions such as nursing homes, hospices, eldercare and chronically sick facilities. The government’s philosophy on healthcare financing has always been that people must be partly responsible for their healthcare costs. Hence, healthcare is funded via taxes, salary contributions and co ‑insurance with excess payments.GQ: Brazil’s public health system imposes no direct costs on users, as it’s funded through taxation. Access is free and universal. Private health funding varies by contract. You could be asked to pay a flat monthly fee, or be subject to moderating factors, such as co ‑payment models or pay ‑per ‑use so that each new treatment brings additional costs.
What is the role and importance of the insurance sector?
AM: Because of the differences in national health and social security systems, the role of private health insurance differs significantly between countries. In Europe it takes four basic forms:
- Additional – complementary and supplementary – voluntary health insurance comprehensively supports the statutory insured3
- Substitute – insurance replaces publicly‑funded healthcare
- Duplicate – insurance operates as a private alternative in parallel to the public subsystem (as in the UK and Spain)
- Mandatory – private health regimes, such as the Dutch and Swiss health systems, include some public aspects and fully private complementary cover.
GQ: The role of service mediators, such as insurers, operators, brokers and consultancies, is of the utmost importance – given their position in the market and their ability to perform holistic analysis and recommend corrective measures that may mitigate the risks companies are exposed to. Because of the need to reorganise the system to cope with rising costs, consultancies are becoming increasingly important.
Is health insurance based on a managed care system or is it still a reimbursement system? Do insurers have their own health units?
AM: In most countries there’s a managed care or mixed system. In some countries, such as Spain, insurers have their own health units and Portugal also tends to do this.
GQ: Brazil’s private health plans currently adopt various models. They all provide an assistance network (meeting national standards, privately owned, or a mix of the two) and most offer repayment options if you want to use providers outside the network available to you. As reimbursement generally covers all, or almost all expenses, these plans are more attractive, however they’re often only available through high‑ ‑tier policies. Lower ‑tier plans make smaller reimbursements and users must pay out of pocket for the remainder.
JL: Health insurance is still largely managed in two ways: through managed care and reimbursement systems. The managed care model is mainly used where low ‑cost insurance premiums are offered and medical care is closely monitored. The reimbursement system is commonly offered in employer ‑paid insurance programmes as it allows employees to seek treatments with their preferred medical professionals. Private insurers do not typically own health units or medical facilities. There are well established medical providers and hospital groups in the region offering world ‑class facilities and services. For example, Fullerton Healthcare headquartered in Singapore operates in four markets in Southeast Asia and Australia. The company offers primary care and has hospitals and clinics charging medical fees lower than general hospitals. KPJ Healthcare, a major healthcare facilities provider in Malaysia, treats patients with insurance in a ‘stable’ condition. Managing health units is not a core business activity for private insurers. They would rather partner with medical providers and offer consumers first ‑class services at controlled costs.
Looking to the future ‑ how are countries facing the ageing issue and tackling the healthcare costs associated with long‑term care provision?
AM: Europe is a rapidly ‑ageing continent, so this subject should be a top priority. Population ageing and rising medical costs, coupled with new medical technologies, pose great challenges for insurers and the community in general. This will most likely result in even more growth in private insurance sector solutions – particularly for long -term care - but these will only be sustainable if there’s some public sector contribution. So far there have been no significant developments in this area in most countries. In order to find a sustainable and efficient solution, there must be a political discussion involving all stakeholders.
The few existing solutions are isolated and mostly insufficient.
GQ: If you take technological and medical advancements into account, we’re looking at an era of increased life expectancies. So this brings an important concern to the fore: how do we care for people so they age in a healthy manner? Highly complex treatments have a profound effect on health budgets, so if individuals maintain a healthy lifestyle, it will considerably lessen the impact.
With this in mind, primary care strategies focusing on advocacy and prevention are gaining more traction. Family medicine, for example, which lost ground to specialist doctors, is now considered a model that could help turn things around. The main barrier to implementation is, above all, cultural. We have a population that would prefer to see a specialist because they believe specialists provide better service. That’s not necessarily true - studies show a family practitioner can resolve more than 80% of cases and, when they need to refer you to a specialist, they do it in an informed manner, considering patients’ real needs.
What solutions are you putting in place and what impact do you think this will have on the insurance sector?
AM: There are currently no appropriate solutions in place, but the insurance sector has an important role to play in finding an answer, together with governments and other stakeholders. Demographic policies might have some relevant contributions to make, but in several European countries (Portugal included) the fertility rates are not much higher than one child per women, giving us the prospect of a very bleak future in this area.
How will new technologies impact health insurance, particularly from a cost perspective?
AM: We can see this from two different perspectives: on the one hand, new technologies for treatment or surgical and diagnosis procedures are inevitably increasing costs in the short term; but new technologies that allow for early diagnosis, help prevent future costs that would inevitably occur, due to complicated surgical procedures and costly treatments. Also, telemedicine provides quicker and less costly access to healthcare, for instance preventing patients from using emergency units in around 60% of cases, and in a higher percentage, replacing that second medical appointment. Here, as patients auto -monitor themselves and so are likely to take more preventative measures, technology will contribute to reduce costs in the medium- -long term.
GQ: In the private sector, technological tools are enabling us to anticipate future risks, helping to reduce costs and optimise resources. At present, machine learning algorithms can, with high certainty, predict groups of individuals with a high likelihood of developing a given pathology. This type of solution stops us looking at medicine in our rear -view mirrors; we can now look forward and work smartly and efficiently to try to solve or reduce health issues.
JL: The healthcare industry is not spared in this age of digital revolution and digital health innovations will certainly play a significant role. Using data to deliver healthcare efficiently and effectively improves treatment outcomes, prevents health insurers running unnecessary tests and treatments and so minimises costs in the long run. In addition, consumer -friendly mobile apps will get people involved in taking charge of their health. Mobile apps offer a myriad of opportunities, early health intervention and healthcare solutions for consumers and medical providers.
What role have insurers played in health education and how important do you feel this is?
JL: Insurers do not play an active role in public health education as no budget is set aside to run country or state-wide campaigns. Public health education is actively promoted by the Ministry of Health in each respective country. In the private sector, insurers partner with independent healthcare providers or sponsor campaigns to run targeted marketing initiatives. These often follow the government’s recommendation for a health programme or are due to the implementation of specific laws or policies. Collaboration with the government and all stakeholders in the healthcare eco-system is crucial to the sustainability of healthcare costs and it is therefore paramount all parties work together to achieve common goals.
JL: With a population of 4.5 billion and growing (as of December 2018), Asia is the largest and most populous region in the world. Its population almost quadrupled during the 20th century and Deloitte estimates that over 60% of the total global population aged 65 years or older will reside in Asia by 2030. This, coupled with rising affluence creating a wealthy and expanding middle class, is causing an imbalance in the public and private healthcare eco -systems. In fact, Asia’s affluent consumers are set to increase this century and they will expect more from their healthcare services. Rising affluence also creates rising healthcare issues; habit changes such as sedentary lifestyles and diet choices contribute to modern day diseases thereby raising healthcare costs. Another effect of consumers’ affluence is the over -consumption of insurance. Health insurance products that offer very ‘rich’ or comprehensive benefits are popular with the affluent, creating an adverse behavioural effect. With generous insurance benefits, consumers tend to use more healthcare services such as undergoing unnecessary medical tests and failing to set a realistic budget for their medical costs. These costs ultimately increase insurance premiums in the long term.
What solutions are you putting in place and what impact do you think this will have on the insurance sector?
AM: There are currently no appropriate solutions in place, but the insurance sector has an important role to play in finding an answer, together with governments and other stakeholders. Demographic policies might have some relevant contributions to make, but in several European countries (Portugal included) the fertility rates are not much higher than one child per women, giving us the prospect of a very bleak future in this area.
GQ: A good example of technology to support healthcare is the growing implementation of the Prontuário Eletrônico do Paciente ‘Electronic Medical Record’ (PEP). This system logs patients’ medical data and shares it with other platforms, raising the quality of assistance as it logs all the care a patient receives. Another technology now gaining ground is remote assistance. Its advantages include: reliability and the provision of a fast service, while once again, improving the quality of health services for those in need. All these solutions, when used, greatly reduce waste.
JL: Looking ahead, the healthcare landscape is largely about partnerships, engagement and innovation. All stakeholders in the healthcare system, including the government, will need to collaborate further to reduce wastage and the financial burden - in areas from formulating policies to product development. Advancements in healthcare and digital technology will bridge the communication gap between all those involved in the healthcare system, accelerating the transmission and accessibility of data for analytics and product innovation.
How will new technologies impact health insurance, particularly from a cost perspective?
GQ: In the private sector, technological tools are enabling us to anticipate future risks, helping to reduce costs and optimise resources. At present, machine learning algorithms can, with high certainty, predict groups of individuals with a high likelihood of developing a given pathology. This type of solution stops us looking at medicine in our rear -view mirrors; we can now look forward and work smartly and efficiently to try to solve or reduce health issues.
JL: The healthcare industry is not spared in this age of digital revolution and digital health innovations will certainly play a significant role. Using data to deliver healthcare efficiently and effectively improves treatment outcomes, prevents health insurers running unnecessary tests and treatments and so minimises costs in the long run. In addition, consumer -friendly mobile apps will get people involved in taking charge of their health. Mobile apps offer a myriad of opportunities, early health intervention and healthcare solutions for consumers and medical providers.
What role have insurers played in health education and how important do you feel this is?
AM: For some time now insurers have understood that being proactive in prevention is very cost effective (rather than paying for treatments after a declared and more advanced disease). Today, for example, health insurance policies cover total or partial regular client check-ups.
In our opinion insurers should take a more active role in health education, particularly in promoting healthy habits.
GQ: According to Stanford University, a person’s health is determined mainly by their lifestyle (53%), their environment (20%), genetics (17%) and finally, health services (10%). Technology may bring countless opportunities to improve health systems and service delivery, but people and their choices can make the greatest change. Although health providers are important when it comes to offering tools and resources for people to look after their health, without ownership and engagement from each individual, barriers cannot be overcome.
In this context, education - from beginning to end of the health service chain – plays a key role.
JL: Insurers do not play an active role in public health education as no budget is set aside to run country or state-wide campaigns. Public health education is actively promoted by the Ministry of Health in each respective country. In the private sector, insurers partner with independent healthcare providers or sponsor campaigns to run targeted marketing initiatives. These often follow the government’s recommendation for a health programme or are due to the implementation of specific laws or policies. Collaboration with the government and all stakeholders in the healthcare eco-system is crucial to the sustainability of healthcare costs and it is therefore paramount all parties work together to achieve common goals.
