The health insurance market is a kind of complex matrix.
With over 320 plans to choose from, it would test even the most patient individuals.
It’s no wonder most of them just let their policies renew when they need to be renewed.
However, premiums are starting to rise again along with goods and services in other sectors of the economy, so shop around before renewing cover.
According to the Health Insurance Authority (HIA), more than 2.4 million people – nearly half of the population – have private health insurance.
Despite expectations to the contrary, the number of people covered has actually increased during the pandemic.
This despite a decision by the Health Service Executive to temporarily take over private hospitals to deal with the possibility of a rise in the number of patients requiring hospitalization for Covid-19.
It was thought that many households, especially those who may have been under the pressure of temporary layoffs, may have chosen to drop their cover.
But it seems the pandemic has had the opposite effect. The sight of overcrowded health facilities and the prospect of long waiting lists in the public system seemed to demonstrate to people the value of having some level of health insurance coverage.
Tens of thousands of people signed up, bringing the number of people insured back to 2008 levels, where it had peaked before falling for the first time in decades at the start of the financial crisis.
Premium increase expected
Premium increases have remained relatively moderate in recent years.
Figures for 2021 from the HIA show the average cost of premiums increased by 2% on the previous year to €1,466, although it has fallen further this year.
Last year’s increase was largely due to a rise in claims costs which rose to €2.1 billion in 2021 from €1.9 billion in 2020. However, it was still lower to 2.4 billion euros in claims in 2019.
Health insurers have given consumers a partial discount on their premiums in recent years in recognition of the reduced level of access to hospital care during the pandemic and the subsequent reduction in claims. In some cases, these discounts have continued this year.
However, the claims landscape is changing again, with hospital services returning to more normalized levels of activity after the pandemic and inflation is also putting pressure on the cost of treatment.
“Premiums tend to follow claims costs,” explained Dr. Brian Turner, lecturer in health economics at UCC.
“Claims costs reflect a growing and aging population that tends to require more medical care, leading to higher claims costs,” he added.
In addition to this, he speculated that people who may have decided to postpone seeking care or whose procedures were canceled during Covid, may now seek more advanced treatment for conditions that may have occurred. -be aggravated in the meantime, which could further contribute to claims costs. as well as greater pressure on the public system.
Irish Life was the first to emerge from the traps in the last round with the announcement of a 4.5% increase in the price of most of its plans which will apply from the new year.
The insurer said inflation in the cost of hospital procedures – which it described as “very significant” – was behind the decision.
Other insurers are expected to follow suit in due course.
“We’re surprised they lasted so long,” said Dermot Goode, health insurance expert, from Totalhealthcover.ie.
“We’ve heard all kinds of market noise about pressure on prices. All private hospital costs are skyrocketing and all of this feeds into negotiations with health insurers,” he explained.
With medical inflation at 5-7%, Mr Goode said he was waiting to see who broke ranks first.
Maximum renewal period
Up to a million people are about to renew their policies between December and February, which means that peak renewal season is upon us.
It is no coincidence that price increases tend to coincide with this period.
However, Irish Life’s premium increases are due to take effect on January 1, meaning those due to renew their premium by December 31 will avoid the increase.
“Insurance companies are looking two years out,” Dermot Goode explained.
“We’ve slipped away very slightly in terms of premium increases lately. It’s not that costs have come down – they haven’t. It’s just that claims were lower than what was budgeted, but [the insurers] now expect it to do a full U-turn,” he added.
He said consumers should prepare for a 5-7% increase in premiums, reflecting the medical inflation environment.
But he struck a positive note by saying there were still savings to be found on many counts.
He estimated that about half the population was insured on “bad plans” and probably paid too much for their coverage.
By shopping around, and especially by dropping old plans that have been on the market for up to two decades, they could be in line for substantial premium reductions.
“The potential savings for these members are between €500 and €1,000 per adult and in some cases they don’t even need to switch insurers to achieve this,” Mr Goode pointed out.
A younger cohort of policyholders
Although premium increases are driven to some extent by an aging population with more complex health care needs in general, the insured population appears to be increasing among younger people in the market, which is encouraging.
According to EIS figures, between July and the end of September, coverage increased among 18-26 year olds, while among those over 26, it remained stable.
Known as community rating, a system of equal pricing for all members relies on younger people – who typically have fewer healthcare needs – buying insurance and essentially bearing the costs of older members. who are likely to need to use their insurance more frequently. .
In order to perpetuate this model, a loading mechanism was put in place in 2015 which penalized late entrants to the health insurance market.
“A loading of 2% of the gross premium will apply for each year of age over 34 that an individual has reached when first subscribing to private inpatient health insurance,” the HIA explains on its website. Internet.
The introduction of the policy saw an initial increase in health insurance take-up.
“It came into effect on May 1, 2015, after a nine-month grace period during which anyone could take out a policy without facing late loading,” explained Brian Turner.
“Needless to say, in April 2015, 78,000 people crammed into the market at the last minute,” he added.
Many newcomers to the market at the time, who wanted to avoid the charge, opted for entry-level plans that essentially cover care in public hospitals – which, contrary to popular belief, is not free. if the patient does not have a medical card.
However, there seems to have been a move towards more advanced plans since the pandemic.
“A lot of people see how limited these entry-level plans are and they improve their coverage,” Dermot Goode said.
“There’s a real focus on benefits rather than price,” he explained.
However, while some are opting for an upgrade, Mr Goode said many others have seen health insurance as an area where savings can be made as other bills rise exponentially and have sought to degrade their coverage.
All of this will fuel price momentum in the months and years to come.
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