by Emma Kennedy, Sunday Business Post

With prices increases of up to 45 per cent on certain health insurance plans in the last year, consumers are likely to get a shock when they get their renewal letter for 2012. According to the latest figures from the Central Statistics Office, health insurance premiums rose by an average of 22.9 per cent in 2011.

Quinn Healthcare’s prices increased by an average of 12 per cent on January 1, while Aviva’s rates will go up by a flat 15 per cent in March. A price announcement from VHI is also expected in the coming weeks, but the company said it had made “no decision on pricing announcements for 2012” at this time.

The Department of Health recently decided to increase the health insurance levy for 2012. As yet, none of the three health insurers has passed on this increase to customers, but consumers should prepare for further price hikes ahead.

Quinn’s spokeswoman said it was “very difficult” for any organisation “to fully absorb such significant increases”. It’s not just the levy that might drive up prices. “A number of other factors in addition to the levy could have an impact on premiums in the near future,” Aviva’s spokesman said. “That includes the minister’s proposed redesignation of public beds.”

Affordability

“Affordability is by far the biggest issue at the moment,” said Dermot Goode of healthinsurancesavings.ie, which is part of Cornmarket Financial Services. He said his clients were reporting that policy costs had gone “through the roof” and, as a result, a lot of people were “trying to rejig their cover”. But trying to change to an alternative plan to save money can be a tricky business, with a plethora of plans to choose from. “The level of complexity that has crept into the market is unbelievable,” said Kevin Kinsella, senior healthcare consultant with Mercer. “Consumers have their work cut out in terms of determining what is covered. It’s more important than ever to be careful with the small print.” Kinsella said that people bought health insurance primarily for “access to treatment when they need it”. “The second reason is for cover for day-to-day expenses, but they are usually willing to sacrifice the latter before the first,” he said.

Typically, plans with day-to-day cover are more expensive. Kinsella also said that the cost of this type of cover was increasing more rapidly than plans which covered just hospital care, as increased claims pushed up costs for insurers.

“It’s behavioural, really,” he said. “People are more likely to claim now. They are claiming for every single thing now. They are more aware of their weekly income and are pursuing all costs.”

Cancellations

While cost pressures might be making health insurance less appealing, Liam Sloyan, chief executive of the Health Insurance Authority, said that most consumers could make considerable savings while still maintaining close to their current level of cover.

According to figures from the HIA, some 47.5 per cent of the population have health insurance. Sloyan said that the number of people with cover peaked at the end of 2008 at just under 2.3 million. By late last year, this figure had dropped by more than 100,000 to just under 2.2 million.

“There could well be more of a drop,” Sloyan said. “New figures due in a couple of weeks will show us how things are going.”

Sloyan recommended that anyone thinking of cancelling their cover or downgrading to a cheaper plan should first look at the HIA’s online health insurance plan to find the best fit for their needs and the best value plans on offer.

If you do decide to cancel your cover, keep in mind that, once your cover lapses for more than 13 weeks, you will have to serve your waiting periods again if you take out cover again in the future. This means you will have to wait for a set period after joining the plan before making a claim. However, some insurers have indicated that they are willing to waive the waiting period for new conditions if you rejoin within one year.

Cover changes

When it comes to price and policy changes, insurers must give the HIA ten days’ notice before any changes are implemented. Such details are then published on the HIA’s website. “Benefits are always under review,” said Kinsella. “The insurers are always looking at tweaks.”

A move by insurers to limit the cover they provide for certain types of condition is one of the biggest recent changes. Last February, VHI introduced a list of restricted procedures, including hip, knee and shoulder replacement and cataract surgery. The insurer will now pay 80 per cent of the cost of these procedures in a private hospital, versus 100 per cent previously. “In order to keep plans as affordable as possible, cover for some medical conditions have been removed or reduced on different types of plan,” said a VHI Healthcare spokeswoman.

Similarly, Aviva has recently introduced a co-payment for certain orthopaedic procedures in private hospitals, with customers expected to pay a proportion of the cost of the procedure.

“Quinn hasn’t made any such changes yet, but I expect it will,” Goode said. Kinsella echoed this view, saying that he thought it was “only a matter of time” before Quinn introduced a list of restricted procedures, given that its rivals had already done so. However, Quinn’s spokeswoman said the “concept of full cover was important”.

Corporate plans

Consumers must be allowed to buy any health insurance plan they want, with health insurers legally obliged to sell the same products to everyone. “Consumers in the health insurance market have a lot of power,” Sloyan said. “Everyone is entitled to buy any product they want.”

Corporate plans offered to specific companies or large groups can sometimes represent better value than the more common plans marketed by health insurers. Consumers can choose to purchase these types of plan, but the cost savings are not as significant as they used to be.

“The gap is narrowing,” Kinsella said. “Because of the levy increases, the prices of corporate plans have also increased.” According to Kinsella, some companies who provide health insurance for staff are now looking at providing a set sum of money towards health insurance, rather than paying for a specific plan. “They don’t want to be locked into price increases,” he said, “so they are capping their liability in cost terms.”

Tips to cut your bill

When choosing your health insurance cover, remember that you can choose different types of cover for different members of your family. Goode suggested that “split cover” could help to reduce bills without taking on huge risk. “Put people on different levels of cover depending on their requirements, but all remain on the one policy,” he said.

The type of hospital accommodation you opt for will really affect your premium. However, your choice of accommodation is not always guaranteed so think carefully before stumping up the cash. “There’s no point having cover for a private room in a private hospital unless this is an absolute priority for you,” Goode said.

Other tips for cutting the cost of your health insurance are asking about student rates and changing your renewal date. Goode said that student rates could “substantially” reduce costs but did not apply automatically. “They have to be claimed from the insurer,” he said.

He said that changing your renewal date was a “short-term measure” that could sometimes be used to avoid price increases.

Patrick Brennan
Director of Corporate Business
Irish Health Insurance

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