While more choice is, generally speaking, better for consumers, sometimes the array of options on the table can leave people overwhelmed and afraid to make any choices at all, even if the inertia sees them spending more money than they need to.
That has been the case for many years in the health insurance market, where hundreds of different policies with sometimes incomprehensible names offer cover for a dizzying array of complex procedures and rely on jargon that frequently leaves consumers bamboozled. As it stands, there are 348 different health insurance policies available from just three providers. With Aviva set to re-enter the market in the months ahead, the number is soon likely to come close to 400.
The difficulty for consumers is not just the confusion of choice – it is finding a product which meets their needs at their particular time in life, at an affordable cost. Rising costs reflect, in large part, the increasing price of medical procedures, but the insurers often do not provide customers with clear guidance to help them get the most appropriate insurance product at the lowest price.
The Health Insurance Authority (HIA), which regulates the sector, is correct to conclude in a report issued this week that the market has grown too complex. It has urged insurers and policymakers to collaborate on streamlining it “to create a more competitive, transparent and consumer-friendly environment”. The HIA finds that consumers are often “overwhelmed with too many product options and terminology that is difficult to navigate”.
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Making switching easier matters. Policy costs have climbed by an average of 7 per cent this year alone, adding hundreds of euro to the bills faced by many households. While shopping around can lead to savings, over 70 per cent of the 2.5 million people with health insurance have never switched provider. A significant increase in the perception of switching being too difficult has been recorded by the HIA.
It believes legislative changes may be needed to simplify the market, but this would take time and the legal roadmap is unclear. In the meantime, it will explore what can be done “on a voluntary basis” to make the market work better for consumers. It remains to be seen what – if anything – will come of this. Insurers need to do the right thing by their customers and make the market less complicated and more transparent. If not, legislation will, indeed, be needed.
Meanwhile, the ongoing need for expensive health insurance reflects the slow progress of reform in the sector, despite the huge additional resources being spent on it. People are still paying health insurance not only for add-ons, such as a better hospital room, but also to get basic treatment in a reasonable timeframe and escape the queues of the public system.