With three health insurers in the Irish market, consumers are now able to shop around for better value cover, writes Laura Slattery
Medical inflation is running at around 9 per cent. Minister for Health Mary Harney has increased the cost of private beds in public hospitals by 10 per cent. All three private health insurance companies increased their premiums last year by between 6 and 12.5 per cent.
Yet despite all this, families with children will be able to cut the cost of private health insurance in the new year, as Vivas Health, the newest and smallest company in the market, is again offering a 50 per cent discount on children's premiums.
The offer, which first ran in August, will apply to all new customers who sign up to Vivas Health during January, as well as existing customers whose renewal dates happen to fall during that month.
The discounted Vivas We Plan (Level 2) will cost a family of two adults and two children €1,125. A similar hospital plan from VHI, Plan B, will cost the family €1,485, while Essential Plus from Bupa will cost them €1,297.
So a two-parent, two-children family will be able to save up to 32 per cent on their private health insurance by switching insurers.
Vivas Health's aggressive campaign to steal customers from State-owned VHI and the not-for-profit Bupa Ireland is not just confined to prices. Its entry into the market in October 2003 has spurred a period of product launches and relaunches from all three insurers, leading to the observation that health insurance is now better value-for-money, despite the predictable annual premium increases.
"I can only expect that the innovation we have seen this year will continue," says Aongus Loughlin, healthcare consultant at employee benefits firm Watson Wyatt.
"Vivas are obviously going to be really pushing hard to sign up both individuals and companies. The 50 per cent discount for kids will be very attractive to a lot of people. It will significantly reduce the cost of insurance for families," he says.
Vivas has also distinguished itself by having a very generous definition of a child, Loughlin adds, offering children's rates to students up to the age of 23. Bupa charges students up to the age of 21 the same rate as under 18-year-olds, but VHI's student rate for people aged 18-21, makes it less economical for families with older children.
Parents have traditionally wasted money on insurance for their children, largely due to application forms that oblige them to cover their children at the same level as themselves.
The most popular insurance plans - VHI's Plan B and Bupa's Essential Plus - offer cover for a private room in a public hospital and a semi-private room in a private hospital.
But adults who want cover for a private room in private hospitals, including the Mater Private and the Blackrock Clinic, frequently end up paying for this cover for their children, even though the majority of children will be treated in a public children's hospital and won't get anywhere near a single room.
The medical expenses most frequently incurred by children are for so-called everyday healthcare: GP visits for infections, sports injuries and whatever virus that's doing the rounds at their school; dental visits for routine check-ups, tooth pulling and fillings.
But up to a couple of years ago, parents could only be compensated for these visits by a combination of health cash plans and tax relief.
Cover for day-to-day expenses can now be purchased as part of Bupa's Health Manager plans and VHI's Life Stages plans or as an add-on to the Vivas plans. VHI also offers a standalone everyday healthcare product called Health Steps.
But consumers who remain on older VHI plans A-E or Bupa's Essential and Essential Plus plans typically have no cover for the most common outpatient expenses such as GP fees, consultant fees and visits to dentists and opticians, or at least would have to wait until their annual bill exceeds a high threshold before they qualify for a limited benefit.
It is little wonder then that dental cover, GP cover and outpatient cover topped the list of benefits consumers recently told a Health Insurance Authority (HIA) survey they would like to see improved in their policies.
VHI has recently rejigged its dental insurance product, making it better value.
Following Vivas's move to become the first health insurer to offer cover for laser eye surgery, insuring €1,000 of the cost the surgery conducted by the Optilase Clinic in Dublin, the VHI has responded by offering €1,000 off the cost of surgery at the Wellington Eye Clinic.
New mothers are also benefiting from increased competition between insurers.
Bupa has recently improved its maternity benefits across all of its plans, following increases by VHI and Vivas earlier in the year. Maternity grants for admissions to private wards now start at €1,600 on its basic Essential Plan and rise to €3,000 on its HealthManager Gold plan.
"Bupa now has the highest maternity allowances, so that could spark another round of increases. They're all trying to better each other," says Loughlin.
With the state of the health service commonly perceived to be, at best, frenzied and under strain and, at worst, chaotic, slow and impersonal, health insurers are increasingly offering hand-holding services designed to assuage consumers' fears and efficiently answer their questions.
For no extra cost, VHI is offering expectant and new parents access to a new helpline, BabyTalk, staffed by midwives, while Bupa is inviting members to consult its second-opinion service, Best Doctors.
Vivas was the first to offer new mothers post-natal domestic support for three days after the birth of their baby - in other words, someone to come around and boil the kettle while the proud parents are ensconced in feeding and nappy changing.
VHI is still the dominant player in the market, claiming to cover 1.55 million of the 2.07 million people who have private health insurance.
Although it benefits from a combination of consumer inertia and brand loyalty, VHI will need to keep up the pace of innovation to keep its rivals at bay, according to Kevin Kinsella, healthcare consultant at benefits firm Mercer.
"Definitely there's a move by insurers to try and differentiate themselves from the competition," he says. "I think it will really come down to price."
