The social and economic context of 2023 was shaped by a number of challenges and opportunities within the insurance sector, especially regarding health insurance.

Inflation affected many economic sectors; public demand and use of health insurance rose due to growing awareness of the importance of health and wellness, plus the need for more complex treatments, strongly motivated by a decrease in follow-ups and service lagging behind customer needs during the pandemic.

This picture would remain incomplete if I did not mention the pressure the Portuguese health care system (the SNS) has been under, which naturally impacts complementary subsystems like health insurance. The SNS has found it challenging to attract and retain medical personnel. Doctors end up going over to the private sector, and this professional cohort is aging — many doctors have retired over the past few years. Let us not forget, either, that many doctors refuse to work overtime that surpasses legal restrictions.

Primary care is where the system’s frailties manifest more severely. More and more customers lack an assigned family physician (over 1 million in 2019 and 1.7 million in 2023) and assistance numbers have dropped to 17.9 million appointments from 20.7 million in 2019. So you have a large group of customers that can't get help from the SNS. They languish in emergency rooms or get added to a wait list for hospital appointments.

Although the SNS also presents shortcomings in hospital assistance, activities like specialty appointments and scheduled surgery have in 2023 soared to maximum capacity. However, most assistance provided by state-network hospitals has been followed by increasing demand. Health needs are on the rise and primary care struggles to respond — as a result, wait lists grow longer for specialty appointments and surgery.

While a strong national health service is a fundamental need, health insurance is now an essential safeguard to individuals and families as a complement to the SNS and as such it is likely to gain more traction in the future. Currently, over 3.7 million people, either by individual choice or through their employers, benefit from health insurance which provides them with preventive care and early diagnosis services, as well as treatment and follow-up for increasingly complex conditions, thanks to more funding and more widespread coverage for serious Illness.

The greatest challenge facing health insurance (and no less the entire health system) is probably the rise in health costs motivated by structural factors, such as an aging population (Portugal will rank 6th across the world by 2040 in terms of aging), the negative or neutral evolution of risk factors that aggravate the emergence of chronic illness (extremely low levels of physical activity¹, the loss of good, Mediterranean dietary traditions², and high alcohol consumption³) as well as costlier new technologies and therapies (e.g., immunotherapy costs 5 to ten times more than conventional cancer treatments). These structural factors combine with the contextual effects of rising inflation and more frequent resort to health insurance as well as the increasing complexity of delivered services. Put all these effects together and it leads to higher insurance premiums, which means individuals may no longer afford insurance.

Improving health costs must necessarily entail robust investment in prevention and advocacy for healthy lifestyles with the potential to prevent the emergence, or at least delay the development of chronic illness, which accounts for 70 to 80 per cent of health costs. Reviewing existing studies, we can note the massive return on investment that prevention leads to: €1 spent on prevention returns €14 — an unparalleled 1400% yield in profitability⁴. Can you name any other such profitable investments?

Portugal spends about 2% of health costs on prevention. Compare that to the 4-6% in countries like South Korea, Italy, the United Kingdom, Finland, and Canada. Now there's the gap where insurers can step in and drive advocacy for healthy habits and early detection covering a portfolio of over 3.7 million people expected to include more and more individuals as the years roll on.

At the same time, insurers must keep improving efficiency in their processes and endeavour to mitigate any remaining waste in the health domain. Perhaps resorting to artificial intelligence will accelerate evolution and improve performance where these efforts are concerned.

Channelling effort toward better health outcomes may also contribute to making the system more efficient and effective. To that end, insurers must take chances on the benefits that advances in personalized medicine propelled by the breakthroughs in genetics and advanced computing may bring to prevention and prophylactic measures through the identification of at-risk populations and customized management of such risks, and to the treatment of numerous conditions. Finally, if the system is to remain efficient and effective, there is a pressing need to transition to a pay-per-value model which puts outcomes first and makes it profitable for service providers to invest on prevention and prophylaxis, which requires active engagement from providers and customers, and that engagement may not always meet expectations.

1 Portugal presents the 3rd worst status within the OECD group: only 17% of adults engage in at least 150 minutes of physical activity per week, while the OECD average stands at 40% and Switzerland’s, 76%. Data from the OECD report, Health at a Glance 2023.
2 Only 42% of the Portuguese over the age of 15 consumes the recommended daily portion of vegetables, versus a 57% average for OECD countries and 99% in Korea. Data from the OECD report, Health at a Glance 2023.
3Portuguese citizens aged 15+ consume over 10.5 liters of alcoholic beverages a year versus the 8.6 average across OECD countries. Data from the OECD report, Health at a Glance 2023.
4 Return on investment of public health interventions: a systematic review | Journal of Epidemiology & Community Health (bmj.com)