CH 1 Part 1 (WM) Flashcards
Describe a PMI contract. [5]
.
* PMI aims to assist the PH in covering the cost of private medical care.✓✓
* Individual PMI is a ST insurance contract, usually renewable annually.✓✓ The insurance provider therefore can review the premiums and change the T&Cs of the policy annually.✓✓
* However, although the policy may be underwritten at outset, it will not be (re-)underwritten at subsequent renewals.✓✓
* As these are ST policies, cover is NOT guaranteed from one year to the next.✓✓ However, in practice, so long as the conditions of the policies are met, eg, the PH keeps paying the premiums, the insurer would not cancel policies on an individual basis✓✓ – but it might decide to cease renewal of all the policies of a product.✓✓
* There can be multiple claims.✓✓ Claim amounts are generally unknown and can be volatile.✓✓
* There can be delays in reporting and settling claims✓✓ (although most PMI claims tend to experience relatively short delays.)✓
* They may be sold to individuals or groups.✓
Extra: In SA insurers are prevented from providing indemnity benefits for health related benefits.✓✓
List the prescribed minimum benefits for PMI contracts? [1.75]
- Emergency medical treatment✓✓
- 270 listed PMB medical conditions and their treatment✓✓, classified into 15 broad categories✓
- Diagnosis and treatment of 25 chronic conditions✓✓
“treatment” appears in every sentence
What is meant by “in-patient” and “out-patient” treatment? [2.25]
- In-patient treatment generally involves the patient staying in hospital overnight✓✓. This is likely to be the case where the patient is undergoing a major surgical procedure.✓✓
- Out-patient treatment generally involves treatments received during day visits to the hospital✓✓, eg changing a dressing or having physiotherapy✓✓, which do not involve an overnight stay in hospital.✓
Describe the benefits typically covered under a PMI contract. [3]
A policy may typically cover emergency medical treatment (EMT), in-patient tests, surgery, hospital accommodation and nursing.
HANSIE [1.5]
It may include out-patient tests and consultations, overseas cover and cash payments while in a state-funded hospital.
OCOCS [1.5]
Describe the needs that are met by a PMI product. [2.75]
- PMI aims to assist the PH in covering the cost of medical care✓. This will meet needs directly where there is no State alternative available to the PH✓ – either because a State alternative does not exist, or because personal wealth levels are above eligibility criteria.✓✓
- In many territories, the State will provide some level of HC to all; PMI is then bought when the individual wants a higher level of care✓✓, such as:
- Medical attention without waiting.✓
- Medical attention in higher standards of accommodation, e.g. private room.✓✓
- Medical attention with doctor of choice.✓
- Medical attention in a local hospital.✓
Tip; the last 4
Medical attention without/in/with/in
Describe the factors that affect the rate of medical costs inflation on PMI products. [3]
- An ageing population of PHs.✓✓
- Lack of sufficient supply✓ of hospital beds or professional medical practitioners, forcing up prices✓✓.
- The move to newer✓ and more expensive✓ treatments or drugs for certain conditions.✓✓
- A greater propensity for PHs to claim✓ following a perceived deterioration in State-provided healthcare.✓✓
- Increases in the salaries of medical staff and the cost of equipment.✓✓
What factors are likely to give rise to differences in the PMI incidence rates observed by different insurers. [2.5]
Differences in observed rates will arise to differences in:
- The mix of business by main rating factors✓ – for example, a greater proportion older PHs will lead to higher claims rates, all else being equal.✓✓
- T&Cs offered✓
- Access to medical SPs✓✓
- Initial UW and WPs✓✓
- Claims UW✓
- Claims Management✓
What factors are likely to cause rating tables to become out of date quickly? [2.25]
- Advances in medicine ✓✓
- Changes in cost of treatment ✓✓
- Changes in treatment protocols ✓✓
- Changes in lifestyle that affect the health of PHs✓✓, e.g. change in dietary habits✓.
Tip: 3 changes”
Define chronic and acute conditions, and explain how an insurer can distinguish between an acute and a chronic condition.[5]
- Acute condition – a cure is a reasonable prospect✓✓, e.g. as result of active treatment.✓
- Chronic condition – there is no prospect that further treatment will improve a person’s health✓✓, although continuing treatment or medication may make life more comfortable.✓
- A very precise definition is required, but may be difficult in practice to define this clearly.✓✓ Some suggestions are:
- Require that the insurer authorizes a course of treatment before it begins.✓✓
- The insurer could classify treatments as “active”✓ (ie designed to improve health)✓ or “passive”✓ (ie designed to alleviate ongoing symptoms.)✓
- Passive treatments would then only be authorized after further enquiries of the insured’s doctor.✓✓ The insurer could ask the insured’s doctor or specialist about the purpose and likely outcome of a proposed treatment.✓✓
- Require that an independent doctor, nominated by the insurer✓, examines the insured, in order to ascertain the LT prognosis for the illness.✓✓
Suggest examples of possible changes to the health of the insured population and healthcare services that could affect the cost of proving PMI cover? [5]
PH-
* New diseases✓ or the increase in prevalence✓ of diseases
* Epidemics✓ on a major (eg SARS virus)✓✓ or minor (eg more cases of influenza due to a cold winter) scale.✓✓
* Lifestyle changes✓ can also change the incidence of claims✓, particularly the prevalence of lifestyle-related conditions✓ such as high cholesterol, diabetes and lung disease.✓✓✓
HCP-
* Increase in the cost of healthcare services✓ due to increase in the cost of health professionals✓, hospital services✓ and medication✓
* Development of new treatments and technology.✓✓
* Early detection may also change cost of treatment✓✓.
The first 3 all have something to say about diseases
Describe the Major Medical Expenses product. [4.5]
The product provides a lump sum when the PH undergoes surgery✓✓.
The size of the lump sum varies with the class or severity of the procedure✓✓ and is estimated to be sufficient to cover the in-patient costs with a balance for incidentals and recuperation expenses.✓✓
There is no guarantee that the benefit will cover extreme surgical complications within the class, unless the policy states this expressly✓✓ and the insurer has an agreement with particular hospital chains for fixed price surgery.✓✓
The product does not cover out-patient episodes, and this may be seen as a serious marketing disadvantage✓✓; however the compensation is a significantly lower premium✓✓.
One big advantage to the insurer lies in the simplicity of a fixed benefit schedule that limits the work to be performed at claims stage.✓✓
It should be noted that in the US, the term “MME” is closer to the UK “PMI”.✓✓
Describe a Health Cash Plan. [5.75]
These are DB DP products.✓✓ For premiums as low as R50 per month✓, the subscriber and family✓ are entitled to a range of specified pay-outs depending on certain healthcare-related events.✓✓ Examples: hospitalisation; gap cover; dental; optical; physiotherapy; maternity; recuperation; hearing aids and consultations. [2]
Benefits may be be limited to a certain percentage of the medical bill.✓✓
The cash benefit is relatively small to the full cost of indemnity which reduces the risk of anti-selection.✓✓
The products are typically community-rated and a WP often applies.✓✓ Pre-existing conditions may be excluded.✓ These policies have relatively small benefits and premiums, and so their success depends on large volumes, high renewal rates and low-cost administration. [1]
Additional marks = 0.5.
Describe a Hospital Cash Plan. [3.75]
HCP’s like health cash plans are DB DP products.✓✓
HCP’s are also low premium low benefit plans✓, which offer a fixed amount per day spent in hospital✓.
Benefits are usually paid from the 1st or 2nd day spent in hospital✓✓, but only if the insured is hospitalised for a min number of days (eg at least two days).✓✓
These products are usually LT✓ and offer cover until a max age (eg 75 years old) or earlier death.✓✓
There may be an option to escalate benefits (and therefore premiums) over the term.✓✓
WPs and pre-existing condition exclusions apply.✓✓
Describe Medical Gap Cover. [2.5]
These are designed to cover the difference between the cost of treatment and the amount covered by PMI.✓✓
These differences can arise due to the benefit limits or healthcare professionals charging higher fees than are covered by the PMI benefits.✓✓
Medical gap cover usually focusses on providing cover for in-hospital medical and surgical treatment✓✓ and out-patient treatment for chemotherapy, radiotherapy or renal dialysis.✓✓
Benefits are usually limited to an annual amount per health event.✓✓
Define the terms “elective surgery” and “investigative surgery”. [2]
Surgery that is not deemed necessary or even advisable, but that the patient chooses to undergo is deemed elective and is seldom covered by standard PMI plans.✓✓
For example, the cure of an acute condition is generally covered by PMI plans, but cosmetic surgery is not.✓✓
Surgery that is undergone in order to advance the diagnosis in order to determine the nature and extent of the complaint(?).✓✓
It is generally covered under PMI products but may not be so under MME products.✓✓
