On the 2nd of May this year in an article on this site I gave my opinion that the PMI market could not sustain the 50% price increases muted by Vhi on foot of the government’s proposed changes to how they charge insurers and private patients for Public Hospital bed charges.  In the article I surmised that the market would find a way to survive such changes.  As suspected the market reacted to the threat of bed re-designation in the manner we accurately predicted.

In the article I assumed the point of view of insurer and tried to suppose how an insurer might find a way around these charges.  We surmised that the following piece of legislation under the ‘Minimum Benefits’ regulations could allow insurers to effectivley decide not to cover many of the countries Public Hospitals:

Preferred Providers 

Private health insurers may also specify healthcare providers in respect of whose services the insured person is covered. The objective is to facilitate arrangements for insurers with preferred providers so as to contribute to cost containment without compromising the quality of care and, thereby, support the affordability of private health insurance. Each health insurer publishes a list of hospitals with whom it has negotiated an arrangement to provide services. A health insurer may exclude an individual health service provider from the scope of its cover if the same service is available from another provider specified in the contract. This exclusion may also be applied to the services provided in a public hospital as no distinction is made between providers under the relevant Article of the Regulations.

On the 28^th of June, Aviva Health led the charge in developing a range of plans called (Focus Plans) which have attempted to deflect some of the financial fallout predicted on foot of new Public Hospital bed charges, by simply not offering cover in many of these hospitals.

These plans have cut cover on up to 25 Public and 17 Private Hospitals across the country. However while this may help with their overall costs nationwide, the plans remain quite regional and Cork does not fare well on them with the Bon Secours and the Mercy Hospital both not covered with Cork University Hospital and the Mater Private favoured instead.

Following on from this, Vhi followed suit on the 15^th of August with the introduction of a plan called HealthPlus Select which excluded cover on 35 Public Hospitals and a number of Private ones.  While as of September 1^st Laya Healthcare has introduced an Orthopaedic co-payment or excess for the first time, despite MD Donal Clancy having promised otherwise at the National Sales Conference in May of this year.

However the intention is not necessarily to offer these plans to Corporates.  More likely is that the costs on their entire book through individual business will be reduced to a level that will allow them to continue to offer the type of cover to Corporates they are used to, at the same competitive rates they are used to. 

Either way the grandstanding that the insurers engaged in during the summer has at the very least suspended the introduction of bed re-designation for this year.  Of course it appears that the Minister is just as committed to introducing this in January 2014 but no doubt the whole thing will have to be looked at again in light of the exclusion of many Public Hospitals across a number of insurers.  The danger for the State is that they could end up with a number of Public Hospitals simply not covered by any private health insurer.

Patrick Brennan