Pricing patients out of the health insurance market
With more people dropping their health cover, the State will utlimately face higher public service health bills
Two patients are lying on trollies in casualty in a public hospital. One has health insurance and the other doesn’t. There are no private beds available. Which patient gets a bed first?
You’d like to think it would be dependent on need but, under a new system proposed by Minister for Health James Reilly, it could make financial sense for the hospital to move the patient with private health insurance to a bed first. Why? Because for a public patient the cost of the bed is just €75 a night – but for the private patient, irrespective of the fact that it’s not in a private ward, the bed could bring in as much as €1,122 for the hospital.
While this may appear unfair to public patients, who either cannot afford, or choose not to avail of private cover, it is also going to be seriously disadvantageous to private patients, who could be facing significant price increases.
Since Dr Reilly came out with the proposals under the Health (Amendment) Act, with the stated aim of raising €60 million in additional revenues this year, and a further €120 million next year, insurance companies have been quick to respond.
Last year, VHI said price hikes could be as high as 50 per cent, while more recently a figure of 30 per cent has been put on it by the Insurance Ireland Health Insurance Council, which represents the four providers in the Irish market. But is this just scare tactics on their behalf, aimed at pressuring the Minister into reducing the charges?
“I don’t think they’re scaremongering,” says Dermot Goode, general manager of health insurance with Cornmarket, adding: “If the legislation is enacted as is, and implemented tomorrow or whenever, it would have a drastic effect on insurance companies.”
As it stands, if insurance companies are obliged to pay as much as €1,122 a night for a private patient in a public bed in a public hospital, it would represent a 15-fold increase, up from the present rate of €75. Not only that, but the current rate only applies to the first 10 nights. So, if a patient is in a public bed in a public hospital for a month, an insurer could be faced with a bill of some €30,000.
From a patient’s perspective, if a public hospital is making the same amount of money from an insurer, there may be no incentive to move them to a private bed.
For consumers, it’s more bad news. An average mid-level health insurance plan for a family of four is now of the order of €2,500 a year – and the mooted 30 per cent increase could bring this well over €3,000.
If, of course, it comes to pass.
“There is still a good bit of uncertainty in relation to how the change in public-bed pricing will impact, and the figure being cited is the worst case,” says Priscilla Sweeney, healthcare consultant with Mercer.
The price hikes might also impact on employees who, heretofore, have been largely unconcerned about the cost of health insurance because it has been covered by their employer.
“We don’t see anyone cutting the benefit, as it’s still very valuable and can be quite emotive,” says Sweeney, adding that what’s happening is that companies are looking more to bespoke plans, which might offer lower benefits at a similar price, or might impose an excess on private hospitals or day-to-day expenses, for example.
What is certain, however, is that regardless of the current furore, prices have been on an inexorable ascent since 2008, when the first health levy was introduced. According to Sweeney, since 2009 the cost of health insurance in Ireland has risen by a staggering 71 per cent and, so far in 2013, costs have jumped by 13 per cent, driven in part by the recent increase in the health levy, which now stands at €350 per adult and €120 per child.