The Health Insurance Authority (HIA) of Ireland recently observed that the country’s health insurance market, which currently includes 348 different policies from three providers, has grown increasingly complex. The assessment highlighted the fact that large numbers of consumers are being overcharged for coverage. It is predicted that the re-entry of provider Aviva into the sector will likely raise the number of available policies to over 400.
This situation contrasts sharply with earlier, simpler times. Until the 1990s healthcare scene was mainly dominated by the government-owned VHI, which facilitated five categories of private health insurance, with Plan B being the preferred choice for most people. The entry of Bupa brought about many changes, as it evolved into Quinn Healthcare, which consequently changed into Laya Healthcare, currently owned by Axa. Aviva’s arrival led to further reshuffling with Irish Life taking over and merging with GloHealth to form Irish Life Health.
The fluidity of the sector, characterised by regular changes of ownership and complex policies, hasn’t made things easier for consumers. To add to the complexity, Aviva announced its return earlier this year. The effects of these changes on pricing has been far from positive – policy costs have seen an average increase of 7%, climbing to €1,674 this year, adding hundreds of euros to bills for households without any clear signs of inflation easing in the industry. However, possibilities for cost-savings within this complicated structure remain. For instance, those transactions of long-standing policies might find their annual costs per adult exceeding €2,500, raising worries and further conversations on insurance breakdowns, which may lead to uncovering savings options.
He clarified that the pair residing in the house were shelling out over €5,000 for health insurance premiums annually. This is after tax, implying that they need to pocket close to 10,000 exclusive of tax just to afford the insurance costs. Without understanding fully the details of their insurance policy or the status of their health, it’s more than likely they are squandering money. They could potentially find similar coverage, either with their current insurance provider or a competitor, for around €1,500 per annum, yielding a gross annual saving of €4,000. This is comparable to two Bonanza Budgets.
Despite potential savings, many remain hesitant to switch providers. The majority of people don’t. In fact, over 70% of the 2.5 million individuals with health insurance have never changed their provider, and only half of those who have switched providers have done so only once.
An increased belief that changing insurers is too burdensome has been noted by the HIA. This brings us to the issue of the 348 distinct policies available in the market. Although increased choice often serves consumers positively, it can also leave them perplexed and fearful of making any decisions, even if their inertia results in overspending.
The HIA suggests that legislative amendments may be required to simplify the market. However, this process will be time-consuming and the legal pathway remains uncertain. While waiting, the plan is to discover what can be done voluntarily to improve the market for consumers. Without sounding too sceptical, it’s doubtful many companies will voluntarily take actions that might be against their best interest. And it’s important to remember, the inertia noted by the HIA solely favours the providers.
Ideally, we shouldn’t rely heavily on private health insurance. Considering the wealth of the State, it’s bewildering that over two million people find it necessary to pay for health insurance. This is not only for extras like access to private hospitals and superior outpatient care, but also to receive basic treatment in a timely manner and avoid the public system’s queues. Health care cover is prioritised over pensions by most Irish employees, as indicated by a recent survey on employee benefits conducted by the Dooley Insurance Group.
The survey revealed a preference for health insurance, with 56 per cent favouring it compared to 49 per cent who chose pensions or four-day work weeks. Significant number of private health insurance policyholders, around a million, typically renew their policies between December and February. It’s therefore beneficial to ponder over their choices well in advance.
The integrity of health insurance is maintained by strict regulations that protect consumers from discrimination based on age or health problems. For example, someone with an established policy from Company A can confidently switch to Company B without fear of losing existing coverage. This rule means that current coverages are retained when changing providers. Added coverage with Company B might require a waiting period, but existing coverage is immediately transferable.
Broadcasting an interesting distinction, health insurance is unique in that it doesn’t financially penalise subscribers for pre-existing conditions or age. This means that, the law and the providers consider everyone to be equal.
Embarking on a plan, the first step is to get your facts straight. Contact your current provider to find out if there is a more cost-effective plan that offers similar coverage as your existing plan. Be prepared for minor reductions in coverage based on the savings.
Your present insurer keeps a detailed record of your past claims. Thus, a simple inquiry would be to ask if any of the proposed new, less expensive plans would have covered all past claims over the last two years to the same standard. If the response is affirmative, then there is no complexity in your decision.
Engaging with a new provider involves full disclosure. Knowing you won’t be penalised for honesty, outlay all the valuable parts of your existing policy, including pre-existing conditions and past procedures. Request confirmation that the proposed cheaper plan will cover everything previously covered.
Finally, engage in these discussions via phone rather than internet. Though online shopping is preferred by providers, it puts the responsibility of the decision solely on us. When talking directly to a company representative and demanding clear explanations, they bear the responsibility for ensuring everything is made clear.
Feel free to get in touch if you have any queries about personal finance, we would be pleased to help. If you happened to miss our previous week’s newsletter, you can access and read it from this point.