Insurance association criticises budget measures - The Times - 15/12/2003

Health insurance measures seen as discriminatory
Fiona Galea Debono (The Times Dec 11th)

The budget's insurance measures led to many additional induced costs, which could not be absorbed by insurers and, of necessity, would have to be translated into higher premiums, according to the director-general of the Malta Insurance Association (MIA), Anton Felice.

He was referring to the measure under which "hospital treatment would be billed for those who are privately insured and those who are victims of accidents and are covered by insurance".

Dr Felice said, however, that the insurance measures were described vaguely and only in principle.

He said the way they had been understood by insurers implied that they would have a negative impact and that the principles could take on a different form in practice when considering the practical problems that surrounded them.

The MIA was, therefore, requesting meetings with the authorities to get a clearer picture of the proposals.

Concrete details would have to be discussed, he said, envisaging "problems to fill in the gaps".

The measures on health insurance proposed "an insoluble dilemma", being discriminatory and contradictory to its own aims, Dr Felice said.

"If the government's aim is to incentivise the public to shift the burden onto the private sector, it is going to achieve the opposite.

"If the patient, who is insured, is going to start receiving bills for hospital treatment, which he is not usually charged for, the consequence is that his claims experience with the insurance company is going to increase. Private premiums would rise in order to absorb the costs of medical care in the state hospital," Dr Felice explained.

He said the patient would end up having to pay three times for treatment in the state hospital: social security; the increased VAT; and, moreover, private health insurance.

In other words, by paying insurance cover for one's own hospital care, a patient would find himself penalised with higher costs, which he could have avoided had he not bought health insurance in the first place, Dr Felice argued.

On the other hand, those who are not insured would not receive the hospital bill, he said, pointing out the discriminatory issues and questioning whether the idea was based on justifiable criteria.

Though the proposed system was still on the drawing board, it has been roughly calculated that its implementation could generate additional charges to privately insured patients of up to Lm1.3 million, which would have to be absorbed through additional premiums, Dr Felice said, expressing serious doubts as to whether the client would be motivated to continue buying private health insurance.

"By buying health insurance, the client would be buying a passport to another bill," he said.

No other country has introduced a measure in which the same level of service is provided to all citizens, but only those who have private insurance are charged and the others not, he said, adding that the proposed system raised several questions.

The same applied for motor insurance in that the additional costs could not be absorbed without having an effect on the premiums which would have to be charged, Dr Felice said.

It was a case of passing the buck in financial terms, but also one that raised several practical difficulties in dealing with the government's aim to generate immediate income from the healthcare it provided.

In the case of bodily injury in a traffic accident, it was not easy to immediately determine who was responsible, or the proportion of blame, Dr Felice said.

As taxpayers, patients suffering injuries in a traffic accident are entitled to free hospital treatment, so they are unlikely to be charged immediately upon being discharged from hospital.

Dr Felice asked whether this would mean that a patient would not receive a bill for treatment until responsibility determined the insurer picking up the claim.

The system was, therefore, not a quick means for charging for hospital treatment, he said. Nor was it a sure way of recovering charges when a bill was issued to a patient, who could make no recovery of costs since he was to blame for the accident, Dr Felice said.

It, therefore, gave rise to many questions in terms of who to bill and when.

The government had announced similar measures in the 2000 budget, and an MIA estimate of how it would impact on motor insurance had shown that the total cost of traffic accident victims could amount to Lm100,000 a year.

In other countries that decided to adopt a similar measure, it was calculated that the premium would increase. The Association of British Insurers estimated, for example, that premiums could rise by eight per cent.

Dr Felice pointed out that the government has not yet indicated how the system would work and the hospital costs Maltese patients would incur.

The VAT increase was another budget-induced cost that would impact on premiums. It was another expense that had a direct consequence on the cost of claims, which motor insurers would have to answer to, Dr Felice said.

In the case of insurance companies, VAT was an actual cost and could not be offset by anything else, he said.

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