Would people be better off without health insurance?

It’s an approach that more and more people are considering taking. Rather than spending €4,000 or so every year on an insurance policy for your family – which, after all, many of us will only receive a slight benefit from in that year – why not put the funds into a savings account, and use it to pay for any medical expenses that might arise. Is giving up on your private health insurance cover madness or might it actually make sense?

Given that the cost of some health insurance policies has soared by as much as 70 per cent over the past four years, while tax relief was capped in the October budget, it’s no surprise that people are giving up on their private cover in their thousands. Indeed, statistics for the end of September show that the number of people aged 18-29 who have insurance dropped by 10 per cent, with more and more people taking their chances in the public sector.

After all, if you don’t smoke, aren’t overweight, are relatively young and fit and healthy, you might wonder why your health insurance policy is subsidising the cost of treatment for people who are ill.

If you do give up your insurance, rather than rely exclusively on the public health system, another approach is to set aside the money you would have paid on health insurance to build up a “rainy day” fund, which can be used to cover medical expenses. But can such an approach work?

Day-to-day expenses
Take an average family's medical bill over the course of a year. It might include six visits to a GP (€300) and two prescriptions for antibiotics (€40); a smear test for the mother (free with the CervicalCheck programme); a visit each to the dentist (€160) plus four fillings (€240); two visits to A&E (€200) plus one set of blood tests (€70); and a visit to a consultant for the father with no follow-up needed (€150).

The total cost of these comes to €1,160. You can claim back 20 per cent through your Med 1 form, which leaves total expenditure of €928 for that year. This leaves you with more than €1,400 in your kitty if you save €200 a month – enough for a family holiday perhaps? Alternatively, you could invest any money left over each year to pay for more hefty bills which might arise. Over 15 years, this could give you a kitty of about €25,000 based on an annual return of 2.5 per cent.

If you had a typical insurance policy, you could claim back some of the aforementioned expenses. But not as much as you might like.

Take Laya Healthcare’s Essential Plus plan, which comes in at about €3,826 a year for a family of four. It levies an excess of €440 a year per family on outpatient charges. You can only start claiming once you have spent this, and after that you can expect about €20 back on GP visits and €51 on consultant fees. VHI’s Parent and Kids plan costs about €2,700 a year for a family of four and has an excess of €300 per person on outpatient fees. Once you hit this, you can get €13 back on GP visits and €39 on consultant visits.

Hospital charges
Thus it can make sense to pay out of pocket for everyday expenses and build up a little nest-egg for any larger expenses that might arise.

After all, if someone in the family does get sick, they can always rely on the public health service. But how free is it? A statutory charge of €75 now applies per night in a public bed in a public hospital, up to a maximum of 10 nights a year. So, if you need a hospital bed for three nights you’ll pay €225, or €750 for 20 nights, for example.

While your kitty should cover such expenses, another disadvantage of relying on the public system is waiting times.

At St Vincent's University Hospital in Dublin, for example, more than 70 per cent of public patients had to wait more than one month for their treatment, while more than a third have to wait for more than three months, according to data from the National Treatment Purchase Fund for October 2013.

Depending on where you live, you might face even longer waiting times. At Kerry General Hospital for example, some 61 per cent of patients were waiting more than three months for treatment in October, with 14 per cent waiting for more than a year.

And remember, those figures refer to treatment. An additional waiting time might apply to see a consultant in the first place. Last year it was revealed there were almost 10,000 people waiting for four years to see a consultant.

When it comes to children, while it's generally advised to keep private health insurance to a minimum, as there are no private children's hospitals in the country, having this cover may accelerate how quickly they will be seen by a consultant, with waiting times again a factor. For example, in October there were 60 children on a waiting list at Crumlin Hospital for more than three years waiting for "general surgery".

Private health insurance typically offers a faster route to both a consultant's appointment, and treatment if necessary.

Paying for treatment privately
If you decide that the best option is to avoid waiting lists and pursue treatment privately, your "kitty" or health nest-egg could kick in to help you meet the costs – provided of course that you've been saving for long enough. But even if you have, will it be enough?

Take the example of a hip replacement. If you’re not willing to wait on a public waiting list, you could expect to pay upwards of €16,000 for treatment. A pacemaker could cost over €30,000 while a heart bypass could set you back €40,000. You would need to be saving a lot to cover such eventualities.

“Fine,” you say. “I’ll pay for the consultant visit privately and get treatment in the public system and try and skip the waiting list like that.” Only you can’t.

According to the Department of Health, while it is possible to see a consultant privately and then opt to get any treatment necessary in the public system, you will be placed on the public waiting list.

"There can be no question of patients being given preferential access to public services on the basis of a previous private consultation with the consultant," the Department says.

Skipping the queue
However, such an approach means that you will at least have skipped the initial waiting time to see a consultant. Remember, however, to clarify with your consultant that your treatment will be given in the public system – it is up to them to notify the hospital.

Otherwise the hospital will assume that after a private outpatient consultation you are being treated privately.

Another option is to pay for the consultation and treatment yourself, and then get a public bed in the hospital. The typical semi-private inpatient charge for example now runs at €933 a day, rising to €1,046 for a private bed. If it’s a day-case, then the private charge is €753, so getting a public bed at the aforementioned €75 a night would help with costs.

Again, however, as the Department of Health says, “it is not possible to mix status during a single episode of care”.

“It is the relationship between the patient and the admitting consultant that determines a patient’s public or private status and not the patient’s relationship with the hospital”. This means that if you’re treated privately by a consultant, you must also pay for private accommodation in a hospital.

In conclusion then, there is no easy answer as to whether building up a nest-egg to cover medical expenses rather than paying out handsomely for health insurance is a sensible approach.

If you can afford it, it’s hard to argue with the peace of mind that health insurance can offer. If you can’t, however, giving yourself some flexibility to cover some costs privately, if necessary, can make sense.