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The trouble with health insurance in Ireland, and what could be done about it

As private health cover rises sharply, insurers need to be more proactive in telling customers when it changes so they do not face surprise demand for payment upfront

CT scans can cost upwards of €525 with recent changes meaning some patients will get just a fraction of that money back from their private health insurer. Photograph: iStock

Dominic Coyle's face
Dominic Coyle
Fri Feb 2 2024 - 12:06

Private health insurance is in the news again for all the wrong reasons – another hike in premiums. VHI, the largest player in the market has announced an average rise of 7 per cent across its plans from March. On top of a similar 7 per cent increase last October and an average price rise of 4.8 per cent last March, it means customers will be paying 20 per cent more for their health cover from March than they were this time last year.

And those are just the average increases. Customers on some plans will be facing a rise of closer to 10 per cent this time around, depending on their policy.

Obviously the hit to your pocket will depend on which plan you have but, with the Health Insurance Authority (HIA) saying the average premium across the market is running at around €1,500 a year, people face an average increase this time around of €105 per person. Over the past year, the premium hikes for that average policy come to €300 per person – or €1,200 for a family of four.

If you were facing that level of increase across any other household outgoing, there would be uproar and a stampede out the door.

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The trouble with private health insurance in Ireland is threefold. First, there are only three players in the market – VHI, Laya Healthcare and Irish Life Health – and they are all raising premiums by more or less the same amount.

Second, the dysfunctional Irish healthcare system means people know they face extraordinarily long waiting periods in the public health system. That inevitably increases the pressure on consumers to consider private health insurance – a safety valve successive governments have been only too happy to accommodate over many years, rather than addressing the fundamental issues with healthcare provision in Ireland.

On top of this, since 2015, a lifetime community rating has been introduced to protect a system that charges everyone on a policy the same regardless of age or medical record. The lifetime community rating determines that you will pay 2 per cent more than the sticker price for your private health policy for every year over the age of 34 that you are when you first take out private cover. And you will do this for life.

This essentially penalises anyone who decides they do not need to consider private health insurance until they are older – either because they are less likely to suffer serious health issues or because their financial priorities at that age are affording a home or raising a young family.

So if you are 35 when you first take out private health cover, the 2 per cent premium means the HIA’s “average premium” of €1,500 will cost you €1,530. Not too onerous you might think, but if you hold off until the age of 45 when mortgage and family spending might be back under more control, you will be paying €330 more for your cover, or €1,830 for a policy that your 45 year old neighbour is still paying €1,500 for because they signed up with a private health insurer at 34.

And naturally, the older you get, and especially in retirement, the more these “penalty premiums” are likely to force you to downgrade your cover at precisely the time you will most likely need it.

The bottom line is that if prices continue to rise, as they have done recently, we will move as a market from securing the medical cover we want to the cover we can afford, but which may well leave us exposed to massive bills if we are unlucky enough to experience a serious illness.

Finally, the sheer tsunami of policies available can be overwhelming. VHI alone has around 150 different policies. Between them, the three insurers have northwards of 320 schemes on offer. How is anyone supposed to keep track of so many, never mind compare the cover provided across such a range?

This problem was thrown into stark relief last week by one reader.

They had gone to Mater Private last month for a CT Scan only to be told they needed to pay €525 up front. Having previously used Mater’s Northern Cross facility for other scans that were billed directly to the VHI, they had assumed they were covered.

Apparently not, and to add insult to injury, they will get back only €120 of that €525 under their policy.

“What’s annoying me is the fact that you don’t know about this until you’re faced with either paying or going back to the consultant to ask for a different referral letter which slows the whole process up even more,” our reader said.

We asked the VHI what had happened here, and it shows up the sheer complexity of the system.

It turns out that although Mater’s Northern Cross did offer “direct pay” – ie they billed the VHI not the VHI member – for CT scans, the same did not apply in the Mater Private, even though it is part of the same group.

And that direct pay facility at Northern Cross ended on January 1st this year as the Mater group decided to move to a “customer pays and claims back from the insurer” model. And no, you’re right, VHI didn’t proactively tell their customers that, which is less than helpful even if this reader would never have been covered from the CT scan at Mater Private.

Well, when I say never, that’s not quite true. You see the Mater apparently does still direct bill for CT scans for cancer patients. Confused? I thought you might be.

The people at VHI note that they currently pay out more than €30 million annually for outpatient scans, and says it has “greatly expanded the number of centres now approved for full cover direct pay MRI scans”. But not, it appears, at the Mater, at least if the referral for your MRI comes from your GP. That was covered at the Mater up to the end of last year but no longer.

Again, I missed the notification.

I’ve no doubt the same happens with the other two insurers but the point remains that customers paying for expensive private cover should at least expect to be told when there are changes in service offered.

It would not have helped this reader as they presented at Mater Private, which has not covered their scan under direct pay anyway, but had they turned up at Mater Northern Cross where non-oncology CT scans had been covered up to the end of last year, they would have had very good reason to be furious. At least they were in the fortunate position to pay €525 up front: not everyone could.

It appears any VHI customer other than cancer patients looking for an outpatient CT scan in Dublin will have to head for either Affidea in Dundrum or Alliance Medical in Smithfield. With the reduced access, no doubt queues will be longer.

The advice from the VHI, who, to be fair, did get in direct touch with our reader, is as follows:

1. Read your policy documents when they send your renewal as things change in terms of cover.

2. If you are referred for a procedure, contact the VHI to check if you’re still covered. Your consultant or GP will not necessarily know that direct payment arrangements have changed. So, they may refer you to a facility that may or may not be covered.

3. Scans have codes and if you have the code this reduces the margin for error as scan prices differ. However, getting the code is not as straightforward as it might be. Your referring medic won’t necessarily have it, in which case you need to contact the radiology department in the hospital/scan facility you have been referred to and ask them for it.

4. How much you are reimbursed on direct payment depends on your cover plan so check back on your documents.

All in all, in my view, that puts an awful lot of the legwork on potentially ill patients and adds to pressure on doctors, hospitals and scan centres as they have to spend significant time fielding calls from bewildered private health insurance customers.

It does not seem unreasonable that the least you can expect for your €1,500 policy is that the insurer’s website presents this information in an easy to understand format, accessible from the top level of their site – ie the home page. VHI has a downloadable directory of what is covered where, but I defy you to find it on a casual visit to their website. The same is true for Irish Life Health. Only Laya seems to make any real effort to make the information readily available to customers or those considering taking out a policy.

The issue here is that private health insurance customers are paying for reassurance – the comfort of knowing that if something happens, they can get it sorted quickly. If you’re looking for treatment, you are already unwell or fearing you might be. You shouldn’t have to have to go through the added stress of having to “shop around” as our reader was advised, in hindsight.

You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.