The costly business of good health

Unlike many other countries there is no state-run, statutory medical insurance scheme in Ireland. While hospital treatment is - generally speaking - free, visits to general practitioners cost around £25 each and all prescription medicines must be paid for. However, many people choose to avail of private insurance to pay for upgraded hospital treatment and to avoid lengthy waiting lists.

Two medical insurance companies are active here at present - BUPA Ireland and the VHI, the state company. The annual cost of plans for either scheme ranges from less than £300 for an individual up to well over £1,000.

The VHI offers 11 different plans, A to E and P. Each of the plans from A to E also has an upgrade or "options" plan to go with it. Broadly speaking, the A plans cover semi-private accommodation in public hospitals, the B plans cover private accommodation in public hospitals, the C plans cover private accommodation in most private hospitals while the D and E plans cover the Blackrock Clinic and Mater Private Hospital.

For its part BUPA offers four main plans - Essentials, Essentials Plus, Essentials Gold and Health Manager. The three essentials plans offer the same style of ascending order of hospital accommodation as the VHI plans, while Health Manager has special features relating to primary care.

Community rating applies to health insurance in Ireland. This means that the companies must charge everyone the same premium regardless of age or health background. However, both companies operate certain waiting periods - for new members under 55 a waiting period of 26 weeks applies before an illness is covered, but accidents are covered from day one; and the waiting period increases above that age. For people with conditions which existed before joining, a waiting period at least five years applies before that condition will be covered.

The VHI and BUPA are forbidden from making special offers to different segments of the population such as under-25s, lawyers, accountants and so on. This means that price is not necessarily a main differentiator for many people, even in the light of recent VHI price increases. The cost of a family of three on either VHI's B Options plan or BUPA Ireland's Essentials Plus works out at well below £1,000.

However, it is in the area of primary care that many people are looking for value today. While hospital treatment is still free to all in Ireland, if they have the patience to wait for it, visits to a GP or other primary care professionals are not, unless a person has a medical card.

Both companies offer partial coverage for GP, out-patient and other primary care treatments. This cover is subject to an excess similar to that which applies to some forms of motor insurance. The insured person is liable for the full cost of a certain portion of the annual bills and then gets a refund of a portion of the remainder. In both cases the refund is £15 per GP visit and on the most popular plans the excess is about £200 per individual or £350 per family - but it is worth checking out the exact details of each plan to see which might suit an individual or family best.

At present BUPA is claiming a considerable price advantage in the market with VHI having implemented one price increase already this year and about to implement another next month.

However, VHI points out that its 1.52 million members receive the benefits of all of the latest, and most expensive, medical technologies, and that fees of any insurers must increase in line with medical inflation which has traditionally run ahead of the consumer price index. Also, there is the thorny issue of risk equalisation.

VHI and others contend that because that company has been in the market since the 1960s it has a much higher age and risk profile of membership than BUPA Ireland, which has been in the market a mere four years or so with just 220,000 members. Due to the effects of the community rating, it is claimed that BUPA Ireland should partially subvent VHI to equalise the risks which both companies carry.

BUPA Ireland responds that if VHI were not profitable that this might make sense but the company actually increased profits in the last year showing that it is not suffering from an unequal risk profile.