Health Insurance
The changes which have occurred in the public health system in New Zealand have made the need for health insurance greater than ever. In the past decade there has been a successive transfer of health care provision from the public sector to the private sector, so that the private sector now accounts for a significant percentage of elective treatment.
The points-based system which has been put into place for public health care provision means that conditions which fall short of being severe or urgent can remain untreated for months or even years.
This trend has also been recorded in other western countries, and is not confined to New Zealand. It is a function of both the ageing of populations and increases in longevity, and is due to the costs of health care increasing exponentially with age. There is a parallel situation with respect to the public provision of retirement income, in which the debate has centred on the affordability of public provision given the increasing percentage of retired people to that of the workforce.
The market for group health insurance is increasing in competitiveness. There is now a number of credible providers with significant financial backing, so that there are real choices available to organisations. The number of plan options has also increased, so that within the one group employees can elect the type of cover which is most suited to their needs. These range from covers for major medical conditions only, to plans which provide a comprehensive range of primary health care and hospitalisation benefits.
The Benefits of a Group Arrangement
The range of benefits available under a group health insurance plan is much greater than that which can be obtained by individuals under personal insurance policies. Consequently employers have the ability to deliver significant value to employees just by exercising their buying power. These benefits include:
- Lower premium rates;
- Cover for pre-existing conditions;
- Waiving of the initial no-claim period;
- Individual servicing by an appointed account manager;
- The influence of a larger group in situations of insurer discretion in meeting claims;
- Portability to an individual plan on leaving service.
Group health plans can also provide access to the above benefits for spouses and dependants, whether these are paid for by the employee or the employer.
The principal reasons why organisations implement new group health plans are:
- To deliver value to employees in excess of the equivalent cash benefit, by using the organisation's buying power to obtain premium rates significantly below those which apply on an individual basis;
- To provide access for employees to benefits which are not available under personal policies;
- To augment the range of benefits available under the organisation's total remuneration system;
- To act on the practical and commercial judgement that ready access by employees to medical treatment when they need it will tend to result in less absenteeism and higher productivity.
Reviewing Existing Arrangements
For organisations which have an existing group health insurance plan, the need for a review and re-tender can arise for a number of reasons. These include:
- The existing plan becoming uncompetitive following several years without review;
- The emergence of new insurance products, or improvements in the terms of existing products;
- A decision by one or more insurers in the market to aggressively grow market share through attractive offerings;
- Dissatisfaction with an existing insurer due to difficulties with claims or servicing;
- Proposed or applied premium increases to an existing plan.
Further Information
If you feel that your organisation could benefit from an independent review of its existing group health plan, or if you are considering implementing a new plan, please contact us.
If you are not sure of whether a review is appropriate in your circumstances, or if you would like some indication of the prospective benefits of a review, we can assess your existing arrangements and advise you of the best course of action.