Competition may be a welcome thing when the alternative has been a monopoly, but as many people have discovered, it hasn't made it any easier to figure out which health insurer to buy: VHI or BUPA.
The VHI's announcement that it is to raise its premiums by 9 per cent next September was bad news for its more than one million customers but good news for their arch (and only) rival, BUPA Ireland. Just two years in operation, BUPA claims it has taken 30,000 VHI clients away from the state agency, (VHI says it is only 16,000) and attracted many thousand more who never had any private cover. It declines to say how many customers it has in total for marketing reasons.
It was clear that BUPA's product, or rather its second version - the first had violated the community-rating system in place in the Republic in which members cannot be discriminated against on age grounds had a number of attractions. For example, it offered treatment for certain heart conditions at the Mater Private and Blackrock Clinic irregardless of the level of cover; children of 18 and over who were still in full-time education were charged at the child rate rather than as adults; the contributions to consultants and other out-patient services were higher; maternity cover was enhanced and alternative medicine treatments were included for the first time. After sitting motionless for more than a year, VHI finally woke up to BUPA's arrival and earlier this year finally matched its mainstream product, Essential Plus, by bringing out VHI Options for each of its five main plans, A,B,C,D and E. With a few notable differences, mainly to do with the length of benefit cover for certain conditions (such as psychiatric treatment); the inclusion or not of alternative treatment benefits, (BUPA offers it, VHI does not); and the size of the contribution towards out-patient fees, the two companies are now offering virtually the same product. Except for the cost. This latest price rise means that VHI is now dearer than BUPA by 22 per cent for its respective mainstream products, VHI Plan B Options and Essential Plus, which independent health insurance consultants believe are the most similar in terms of cover and benefits. (BUPA only has three plans Essentials, Essential Plus and Essential Gold).
BUPA has not been without its own cost increase it raised its rates by 8.8 per cent last February but even if it did so again next February, it would still be more than 13 per cent cheaper than its rival. As the table shows, a family of two adults and two children under the age of 18 would pay (on the discounted group rate) £703.20 a year for BUPA's Essential Plus Plan and £861.00 for Plan B Option, a 22 per cent price difference. Add another child this time one who is over 18, but still in full-time education and the premiums rise to £795.72 for the BUPA cover and to £993.00 for VHI, a price difference of 25 per cent.
If prices are so different and the products so similar why aren't more people switching from VHI to BUPA? Independent health care advisers like Mr Dermot Goode, who manages the health insurance division of the consultants IPT and advises companies on the merits of both sets of products, believes a mixture of brand loyalty and inertia is a major factor.
Individual members simply can't bring themselves, he says, to pore over the competing brochures to work out which is the better plan, fill out all the new forms and cancel their existing policy. Some mistakenly think that joining BUPA will result in a waiting period before their cover comes into effect: in fact this only applies to new members who have never been members of VHI.
Those that switch from existing VHI plans are automatically insured under the same terms they enjoyed at VHI. (Individuals who switch out of a VHI group plan to a BUPA individual plan are entitled to the BUPA group rate.)
Mr Goode has seen first hand, however, how companies are finally starting to take notice of the wide price discrepancy between the two products and while they may be reluctant in some cases to switch to a new provider (mainly where contracts of employment specifically mention the VHI as the health insurance provider) others are deciding that if BUPA can provide the same range of benefits, at significantly less cost, then they will get their business.
"In an increasing number of cases, companies are deciding that the best solution is to make both companies' equivalent plans available and let the employee choose. This suits a lot of firms that are moving into a flexible, or "cafeteria" benefits programme," says Mr Goode. Such programmes allow employees to pick and choose their benefits within a total remuneration package.
