New figures, published today, on the fall-off in people taking private health insurance will have implications for a range of services, writes Martin Wall
THE SURGE in the number of people covered by private health insurance has been one of the phenomena of the Irish healthcare system over recent years. In part, along with State tax breaks, this has been responsible for the widespread development of private healthcare facilities around the State.
However, it now appears that the upward trend witnessed over the past two decades is starting to fall off as the effects of the recession and soaring unemployment levels are felt.
As The Irish Timesreveals today, the total number of people covered by health insurance fell in the first quarter of this year for the first time since these statistics became available in 2001.
The fall-off in the numbers recorded in the first quarter is quite small in itself – there were about 13,000 fewer people covered by private health insurance in March of this year than there were the previous December – however, it is the trend that will be watched most carefully.
In a report to the Department of Health on the latest state of play in the market, the regulator for the sector, the Health Insurance Authority (HIA), warned that demand for health insurance coverage was strongly linked to employment levels in the economy and that the position was likely to deteriorate further in the months ahead.
“It is very probable that the economic crisis and the resulting major fall in employment will lead to a fall in numbers with health insurance even allowing for intense marketing activity and other determining factors.
“The most reasonable projection is that the falling quarterly trend will gather pace as the year progresses and continue into 2010 when account is taken of recent economic forecasts [eg the ESRI in its spring quarterly forecast a 13 per cent fall GNP in the three-year period, 2008-2010],” the report stated.
The HIA report said that long-standing research on health insurance had shown that one of the main determinants of demand was aggregate employment and pointed out that the trend in health insurance coverage was now, albeit somewhat belatedly, following the recent rise in unemployment.
However, curiously, this was not a trend seen in Ireland during the last major recession in the 1980s.
As the chief executive of the HIA Liam Sloyan said in an interview with the Irish Medical News last February, while health insurance was often viewed as a luxury product, during the economic crises of the 1980s and early 1990s, the proportion of the population with private health insurance actually grew significantly.
In the 1980s, more than one- third of the population was covered by private health insurance and since that period the country has witnessed a steep upward trajectory in this figure with more than one in two people now having coverage.
The HIA report to the Department of Health, while linking employment levels to health insurance take-up, makes no specific mention of the impact of price on the current trend.
Over the 12 months or so the cost of private health insurance, which has been rising steadily for years, surged sharply. The State’s largest health insurer, the VHI, increased its prices by an average of 23 per cent for the current year.
Quinn Healthcare, the second biggest player in the market, raised its prices for 2009 by an average of 16 per cent.
The HIA told the Department of Health in a note sent in May this year that the third main company, Hibernian Aviva Health, had passed on the Government’s new health insurance levy to customers in the early months of this year and this “amounted to an average price increase of 19.6 per cent”.
“In addition, Hibernian had effected a price increase in early October of between 5 per cent and 6 per cent,” the HIA note stated.
The latest trends in health insurance coverage will be of interest not only to the players in the markets but also to those running the public health service and investors behind existing and planned private facilities which rely largely on people with health insurance subscriptions for their custom.
For the Department of Health and the Health Service Executive (HSE) there will be a concern that any significant fall-off in the numbers of people in a position to avail of private healthcare could cause additional pressure on an already-stretched public system.
But, as Mr Sloyan said in his interview in February, the cutbacks in public health services in the 1980s may have prompted many people to turn to private insurance in the first place.
This was a view articulated by many observers both in the 1980s and since, and if this was the case in the last recession it is possible that the current and future cutbacks in public health spending could have a similar effect.
Among the current commercial companies operating in the health insurance market, only the VHI has publicly said that it has lost membership.
It has said that it lost 40,000 members in the first quarter, but that it has not experienced a fall-off in subscriptions on the same level since then.
However, both Quinn Healthcare and Hibernian Aviva Health have claimed that, despite the recession, they have gained more members than they have lost so far this year.
Quinn Healthcare told The Irish Times that its business was growing and currently stood at 505,000 members, having passed half a million members net in April.
Quinn Healthcare general manager Donal Clancy said that it had seen a 50 per cent increase in transfers from other insurers for 2009.
“‘The primary driver for this increase is that consumers are shopping around more due to increased financial constraints. This is breaking the traditional inertia in the market. Value for money counts,” he said.
Numbers insured
■ March 2008: 2,254,000 (51.2 per cent)
■ June 2008: 2, 269,000 (51.3 per cent)
■ Sept 2008: 2,282,000 (51.6 per cent)
■ Dec 2008: 2,299,000 (52 per cent)
■ March 2009: 2,286,000 (51.7 per cent)
Source: HIA report to the Department of Health, April 30, 2009
Market share – Dec 2008
Commercial insurers
VHI:69.5 per cent
Quinn:22.4 per cent
Hibernian:8 per cent