The health insurance maze that’s costing millions of people thousands

In the middle of last month, Ireland’s health insurance watchdog issued an assessment of the sector that was obvious, overdue and important.
The Health Insurance Authority (HIA) noted that the market has grown overly complicated and is overwhelming consumers with too many paying too much for cover.
As it stands, there are 348 different health insurance policies available from three providers and with Aviva set to re-enter the market the number will most likely soon top 400.
It wasn’t always so complicated.
For decades up to the 1990s, there was the VHI, a State-owned operator that offered five levels of private health insurance cover from Plan A to Plan E.
Most people had Plan B.
Then Bupa arrived and that quickly morphed into Quinn Healthcare which in turn became Laya Healthcare which is now owned by Axa.
Then Vivas came to town but that was acquired by Aviva, which left in 2016 with Irish Life taking over while also acquiring the 51 per cent of another provider, GloHealth it did not already own.
Those companies merged to become Irish Life Health.
Earlier this year Aviva announced it was coming back. Confused? How could you not be and as with many things, consumers have not seen much benefit from all the chopping and changing.
Policy costs have climbed by an average of 7 per cent to €1,674 since the beginning of this year alone, adding hundreds of euro to the bills faced by many households. And there is no sign that inflation in the sector will ease in the months ahead.
That is not to say people can’t make savings.
Earlier this week, someone approached this writer to express concern at the price they were paying for health insurance.
They were on a legacy plan, one they had for more than 20 years and were dismayed that it was costing them over €2,500 per adult each year.
The couple in the house were, he explained, spending more than €5,000 each year for health cover – and that is a net figure which means they need to earn the guts of 10 grand just to cover the cost of cover.
Without knowing too much about the nature of their policy or the state of their health, it is almost certain they are wasting money and could find a similar level of cover – either with their existing provider or with one its rivals for around €1,500 a year, amounting to a gross saving of €4,000 each year which equates to two Bonanza Budgets.
Despite the savings, they might not switch. Most people don’t. While shopping around can lead to big savings, more than 70 per cent of the 2.5 million people with health insurance have never switched provider. Half of those who have switched have only done so once.
A significant increase in the perception of switching being too difficult has been recorded by the HIA.
That takes us back to the 348 different polices on the market.
While more choice is often better for consumers, sometimes it can leave people bamboozled and afraid to make any choices at all, even if the inertia sees them spending more than they need to.
The HIA believes legislative changes may be needed to simplify the market, but this will take time and the legal roadmap is far from clear.
In the meantime, it plans to explore what can be done “on a voluntary basis” to make the market work better for consumers.
Without wanting to sound too cynical, it is hard to see many companies taking voluntary steps that will work against their best interests and, make no mistake, the inertia that has been identified by the HIA only works in favour of the providers.
Of course, in a perfect world, we might not need so much private health insurance at all. And with all the money that the State seems to have, it is virtually unfathomable that more than two million people feel compelled to pay for health insurance not only for add-ons, such as access to more private hospitals and better outpatient care or nicer hospital rooms, but also to get basic treatment in a reasonable time frame and escape the queues of the public system.
Most Irish workers place healthcare cover ahead pensions according to a new survey of employee benefits from the Dooley Insurance Group.
It found that 56 per cent of those questioned preferred health cover as against 49 per cent for both pensions and four-day weeks.
Around one million private health insurance customers renew their policies between December and February and they would all be advised to think about their options sooner rather than later.
The good news is that much of the complexity is easy to sidestep. There are some very strict rules in place that give consumers protection irrespective of their age or their health issues.
A person who has a long-standing policy with Company A will have already been through their waiting periods and can switch to Company B and get all the existing cover they had with Company A immediately.
To put that more simply, you do not lose the cover you already have by moving from one company to another. If the plan on the table from Company B offers enhanced cover, you will most likely have to wait for that to kick in, but whatever you had, you keep.
Unlike with other forms of insurance, you cannot be penalised financially because of a pre-existing condition or because of your age. When it comes to health insurance, everyone is considered equal in the eyes of the law and in the eyes of the providers.
The first thing to do is get the facts. Call your current provider to see whether they have a lower-cost equivalent plan to the one you are currently on and make it clear you are happy to take on some minor reductions, depending on the savings.
Your existing insurer will already have a complete record of all previous claims you have made, so the simplest question to ask is whether any new and cheaper plans would have covered all the claims that have been paid out over the last two years and to the same level.
If the answer is yes, then your choice is pretty simple.
If you are talking to a different provider, be upfront, bearing in mind you will not be penalised for honesty. Detail all the important elements of your existing policy, and outline any underlying conditions and procedures carried out. Have them confirm that any new and cheaper plan will cover everything you have had covered in the past.
It is also key to do this over the phone rather than online. Providers like it when we shop online, but by doing so we become responsible for all the decisions, be they good or bad.
By talking to a company representative and asking the right questions, and insisting on having everything explained you put the onus on them to make everything clear.
You can contact us at [email protected] with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here