As financial constraints force more people to cancel private health insurance, what are the consequences for them and their families?
AFTER ANOTHER round of punishing health insurance price hikes, it is no surprise that consumers are cancelling their policies in high numbers.
Last year, some 31,000 people failed to renew and, given the ongoing uncertain economic outlook, it is likely that numbers will continue to rise this year.
But before you stop that direct debit, what are the dangers of cancelling your private health cover and are insurance companies doing anything to facilitate members who are getting into difficulties?
In January, the VHI started off the increases for 2011 when it hiked up its prices. This means that members of its Plan B policy will now have to pay an extra €315 when they renew, as the price of the product has been increased to €1,224, while Plan B Options went up by €444.
This was followed by an average price increase of 14 per cent by Aviva in March, pushing up the cost of the insurer’s I Level 2 Plan from €848 to €967.
Then in April, Quinn Healthcare increased its prices by up to 22 per cent. This saw its popular Essential Plus (Excess) plan jump by more than 8 per cent from €898.06 to €976, while its Essential policy increased by 5 per cent to €595 from €567.
Even more worrying than the latest price rises however, is the fact that there is no sign of these stopping any time soon.
The VHI’s Plan B for example, has almost doubled in price over the past two years, and given the cost of private hospital beds, rising medical fees and the impact of the Government’s levy, the only way prices are going to go in the foreseeable future is up.
These hikes are coming against a background of uncertainty as to the future of many of the players. For example, while the previous government had intended to sell the VHI, this has now been scrapped, but Quinn Healthcare is still looking for a buyer as it is not part of the recent Liberty Mutual/ Anglo Irish Bank takeover of the company’s other insurance business.
Unsurprisingly then, many policy holders are taking the decision not to renew their policies. In 2009, the VHI lost more than 110,000 customers, followed by an additional 50,000 in 2010.
And according to a spokeswoman for the insurer, it has again lost members in the first quarter of the year, but “it’s too early to predict what the outcome for the year will be”.
While some of these customers may have switched to other providers, many will have dropped out of the private market altogether, thereby putting additional pressure on the beleaguered public health system. And more cancellations are expected.
This means that by cancelling your private cover, you and your family will be relying on an already over-burdened public system, which is coming under more pressure all the time as a greater number of people drop out of the private system.
Even during the boom years when money flowed into it, the public health system was stressed, but now the service is under severe pressure as the cutbacks spread.
Moreover, if you cancel your insurance to save money in the short term with the intention of renewing your policy once your financial circumstances improve, you might find yourself facing some fairly onerous waiting periods – particularly if you are aged over 55 when you go to renew.
For example, if you are aged under 55, you will have to wait 26 weeks to get cover for new illnesses; 52 weeks if you are aged between 55-64; and 104 weeks, or two years, if you are aged over 65.
These waiting periods get even longer if you’re looking for cover for pre-existing conditions, with a five-year waiting period for those under 55, rising to seven years for those aged between 55-59, and 10 years for those 60 and over. And for those looking for maternity cover, a 52-week waiting period applies.
On top of this, even if your condition is diagnosed after you take out health insurance, if the insurer determines that it existed before this time, then you will have to endure the relevant waiting periods before you will be covered for it.
While a 13-week grace period applies if you allow your health insurance policy to lapse – you won’t incur waiting periods if you renew it again within this timeframe – it is too short a period to be of benefit to most people.
So, instead of cancelling your insurance outright and running the risk of having to put up with the aforementioned waiting periods, it may be wiser to simply downgrade your cover and cut your costs in the interim.
For example, if you are faced with paying €1,110 for Quinn’s Essential Plus (No excess) plan, you could almost half your costs by downgrading to the Essential plan.
Similarly, by moving from the VHI’s Plan B back to Plan A, you could save over €500.
While you will also see a diminution in your cover which will restrict you in the types of hospital you can access – and you will have to face waiting periods should you decide to upgrade again in the future – at least you will be protecting yourself from long waiting lists in the public system.
And if you do find yourself with no other option but to cancel, take the time to discuss your problems with your insurer before you do so.
Some insurers, for example, are taking a relaxed view on the 13-week grace period.
The VHI will waive the waiting periods that normally apply for those who have become unemployed and had to give up their health insurance policy, provided that they rejoin “in a reasonable timeframe”.
They must also show evidence of having been out of work. This scheme will run until April 2012, and to date, it has been availed of by approximately 23,000 VHI members.
Both Aviva and Quinn offer flexible payment options for members who are finding it difficult to maintain their health insurance.
“While many of these customers may have switched to other providers, many will have dropped out of the private market altogether, thereby putting additional pressure on the beleaguered public health system
