Wave goodbye for healthy savings

Further rises in health insurance premiums are on the cards but, by shopping around, families can make considerable savings, writes CONOR POPE

WHEN IT COMES to changing health insurance provider, the magic number is €441, according to an extensive survey published by the Health Insurance Authority (HIA).

Every two years, the health agency takes the pulse of the nation in a wide-ranging survey and on this occasion many of the questions were about money, unsurprisingly given the economic climate we are in and the fact that insurance companies are imposing multiple price increases on consumers at a time when they can least afford it.

Over the past year and a half, barely a month has gone past without one of the State’s three health insurance providers rolling out fresh price increases, but despite that there are savings which can be made by shopping around. A family of four can easily knock more than €1,000 off the annual cost of a policy without reducing the level of cover just by being a little bit smarter.

Despite the potential savings which can be made, the agency reported that only 23 per cent of people with insurance have ever switched from one provider to another. One of the reasons is perhaps that people’s expectations of the savings they should be able to make are a little unrealistic. According to the survey, people who have insurance claim they would need to save a not too shabby €441 before they bothered switching. Isn’t it well for them? Pricewatch would think switching if you saved a tenner made sense.

In an airless hotel room last week, the HIA’s chief executive Liam Sloyan met the press. He looked distinctly uncomfortable as he opened proceedings and answered questions from the six or seven journalists who had come to the briefing. Listening to him, a casual observer would have been forgiven for thinking that all was well with the health insurance industry in Ireland.

It isn’t, not by a long shot. The grim reality is that in addition to prices going through the roof and massive termination fees being imposed on people who seek to cancel policies because they can’t afford them, cover is being reduced on some policies by some companies on the sly, while the sick and vulnerable are being asked to jump through hoops to get access to life-saving treatments.

While many of the problems which have bedevilled the sector for years were ignored by Sloyan, the survey does make for interesting reading. He said it provided “a comprehensive insight into the attitudes amongst consumers in the marketplace”.

It certainly shows that we are living in changed times – some 66,000 people cancelled their policies last year and the number of people covered by health insurance fell from a high of 2.3 million in 2008 to just over 2.1 million at the end of March, the lowest reported figure since mid-2006. Things are likely to get worse, with the HIA warning that a further 75,000 people may drop their cover before the end of the year.

The HIA claimed that 50 per cent of those who left the market last year did so because they could no longer afford the premiums. A further 16 per cent cited job losses and 11 per cent said they had cancelled their cover because their employer no longer paid for it.

Despite the fact that the price hikes, which Sloyan accepted were being targeted largely at older people, are happening as often as three times a year and that the State’s largest insurer (the VHI) has started imposing penal charges on people who seek to cancel their policies or take out cheaper ones outside of set renewal periods, he tried to be upbeat about the state of the market.

He wasn’t very convincing. Among the things he highlighted was the fact that many people “are under strain to keep their cover due to affordability”. It was a statement of the blindingly obvious.

What was less obvious perhaps was the finding that health insurance is now the second most valued employee benefit after a pension.

The percentage of people who believe that health insurance is the single most important employment benefit has risen from 18 per cent in its 2010 survey to 29 per cent today. This is obviously because of rising prices across the industry and a reduced level of confidence in the public sector. For people aged between 18 and 34, it is the most valued employee benefit, ahead of pension, company car or flexible working arrangements.

The survey also highlights the fact that affordability, the impact of price rises, employment issues and the general difficult economic environment are all affecting consumer sentiment.

Attitudes towards private health insurance and premium increases have changed sharply, with the percentage of people who believe price hikes are inappropriate rising from 36 per cent to 49 per cent in just two years.

While the survey highlighted an increased level of switching and a greater readiness of consumers to do so – which the HIA says “is to be welcomed as evidence of a better functioning market for health insurance with a greater degree of competition” – only 23 per cent of consumers have ever switched insurance provider, although that’s up from 16 per cent in 2010.

Sloyan says this figure only tells part of the switching story. “In addition there has been a large amount of switching within insurer. For example, the number of people on corporate plans increased by 170,000 in 2011.”

There is still scope for even greater premium increases and by doing some investigation tens of thousands of families could save themselves a collective fortune.