Wild premium increases and threats of worse to come may prove fatal for the health insurance industry, writes CONOR POPE
TO SAY THE Irish health insurance market is in a state of confused crisis is a gross understatement but one thing all providers, and even perhaps the Government, appear to agree on is that consumers should just keep on coughing up.
One of the three main operators in the market has changed hands twice in four years while over a slightly longer period the State fought a long legal battle to exert more control over the market. And lost.
The range of treatments covered under popular policies has changed and then changed again while other policies have been re-branded with names that might sound friendly but are increasingly meaningless.
And then there are the prices. Health insurance premiums have increased by as much as 50 per cent in just two years as medical inflation (apparently) soared – the absence of transparency in the health insurance sector is well established – and outcomes of once fatal conditions improved.
At the end of November, Quinn Healthcare increased its premiums by an average of 12 per cent, although some policies went up by in excess of 20 per cent. In November the Vhi announced a 2 per cent price rise on top of price increases of up to 45 per cent it rolled out this time last year. Aviva, the third-largest private health insurance provider, increased its prices by 14 per cent in March and by a further 9 per cent in August. In December it went back to the trough and announced a 15 per cent increase effective from this year.
And things are only going to get worse. Threats of more savage price increases have been made by the Vhi, which warned last month that premiums could increase by at least 50 per cent if the Minister for Health Dr James Reilly proceeds with major legislative changes to how private beds in public hospitals are designated.
With up to 6,000 people abandoning the health insurance market each month as prices climb, longer waiting lists and poorer outcomes for patients may be inevitable.
Hospital consultants and patients groups say the public health system is “already under-resourced and working at full tilt” and will struggle to cope with more private patients going public although others have warned against overstating the extent of the crisis.
Stephen McMahon of the Irish Patients’ Association (IPA) says the numbers leaving the private health insurance market is a “very serious situation”. He describes health insurance as a “safety valve” which is now under grave threat. “You have 500 people leaving the health insurance market each week and those people will have no choice but to fall back on an already overstretched public health system but also, as more people abandon their policies, premiums are likely to rise which will put a burden on existing customers.”
Prof Charles Normand is professor of health policy and management at Trinity College in Dublin and he urges caution when making such claims. He says it is easy to overstate the impact of thousands of people leaving the market.
Private health insurance accounts for 8 per cent of the total health budget so if a fifth of those with insurance start relying exclusively on the public system it will add around 1 per cent to the pubic numbers. “The stress of the health cuts this year will have eight times the impact that would be felt if 20 per cent of those with private health insurance left the market so there are much bigger issues out there,” he says.
It is not just the companies who are upping their prices. Last week Dr Reilly increased the health insurance levy by 40 per cent. The increase will mean a family of two adults and two children could be forced to pay as much as €220 more for cover annually if the companies pass on the increases. The increase will see the levy go from €205 to €285 for an adult and from €66 to €95 for a child.
The levy is confusing for many people. It was introduced in 2009 after the State’s risk equalisation scheme collapsed. To rebalance the market, the levy was put in place to provide age-related tax credits for older people to help meet the expected higher cost of health insurance and to ensure they pay the same amount net of these tax credits for health insurance as younger adults pay. These tax credits are funded by a levy paid by health insurers.
Dr Reilly says he wants to make insurance more affordable for everyone and he insists the levy increase has been designed to create “intergenerational solidarity” which will see younger people paying more so older people can pay less.
“Health insurance is becoming harder to afford for older people as insurers increasingly tailor their insurance plans towards younger, healthier customers,” he said. “The Government is strongly committed to protecting community rating, whereby older and less healthy customers should pay the same amount for the same cover as younger and healthier people. The changes I am announcing will provide further necessary support to community rating.”
He said the health insurance market had become “increasingly segmented over recent years with insurers offering tailored packages to younger people that are designed to be unattractive to older people, while at the same time increasing the price of plans they offer to meet the needs of older people. I am very unhappy about this trend, and I have raised the issue directly with the insurers.”
The Vhi said – with a touch of smugness – that it will not be passing on the cost of the levy to its customers. It doesn’t have to, it is getting most of the money back because of the age profile of its customer base – the vast majority of policy holders over 60 are with the Vhi. “The measure does not favour one company over the other – all health insurers are treated equally. If other insurers are cherry picking younger customers, it may impact them,” a spokeswoman says.
She was probably talking about Quinn Healthcare. It has 400,000 customers, most of whom are younger. It was not so calm and it expressed extreme disappointment at the levy increase describing it as “bad news for consumers”.
It said its customers would now continue “to subsidise the inefficiencies of the unregulated Vhi and those customers on the lowest level schemes continue to carry a disproportionate burden of the health levy”.
“As usual, it is families and those on the lowest level of cover that will be most affected,” Quinn Healthcare’s managing director, Dónal Clancy, said.
A cure seems a long way off.
Pulling the plug More than 60,000 stop health insurance cover
OVER 60,000 people have stopped their health insurance policies over the past 12 months with many of them forced to discontinue their cover due to high premiums.
While the thought of having no insurance is understandably frightening, it is not as bleak a prospect as many people think. If you have a heart attack, a stroke, are involved in a car accident or are rushed into AE for any other reason, health insurance is of little use as you will be taken to the nearest public hospital and treated in the public system.
Having insurance is beneficial when it comes to private and semi-private rooms in public hospitals and any stays in private hospitals. Hospitals like the Beacon Clinic, the Galway Clinic, the Mater Private, St Vincent's Private and the Blackrock Clinic are largely out of bounds for people without insurance.
While health insurance can get you into a private hospital fast and allow you to avoid queues, it is not essential to gain access to consultants. Patients in the public system can be left waiting months, if not years, before they get to see a consultant and it has been documented that people have died as a result of these delays.
But private consultants are not exclusively for people with health insurance and you can always pay one to avoid the long wait. While the cost of seeing a consultant depends on who they are, where you are and what is wrong with you, it should set you back no more than €150-€300.
If you are diagnosed with a serious, life-threatening condition you will be treated in the public system where you can reasonably expect to be seen expeditiously – for all its headline grabbing flaws, there are many talented, hard-working people on the frontline of our health service. However, as more people join the public system waiting lists will get longer.
An alternative to insurance is the still little-known Hospital Saturday Fund cash-back plan. Payments into its personal scheme start from €9.50 per month, rising to €55 per month for maximum cover. Someone paying €55 per month will get back half their dental and optical expenses, up to a maximum of €550 a year; €32 per GP visit; €16 for every prescription filled and half the cost of visiting a specialist up to a maximum of €1,200.
Grants for overnight stays in hospital range from €20 to €120, depending on the size of the premium.
