Healthy shave? Curbing the cost of health insurance
Thousands of householders are deciding to downgrade or cancel their health policies to cut costs but insurers are strongly urging consumers to think twice, writes John Cradden
AS MANY consumers look for ways to cut household costs, downgrading or even cancelling private health insurance seems to be one of the options most likely to be considered.
By the end of 2009, more than 40,000 -- or 2pc of the 2.27 million people with health insurance -- had cancelled their cover. VHI starkly predicts that 200,000 customers will cancel by the end of this year.
Not surprisingly, insurers are strongly urging their customers to think twice before getting rid of cover altogether. You might think that insurers would consider cutting their premiums, but there seems to be no prospect of this. They usually blame premium hikes on high medical-costs inflation.
VHI jacked up premiums by an average of 8pc in February. This followed a 15pc average rise in Quinn Healthcare's premiums for 2010. Aviva increased its premiums by an average of 12pc in October 2009.
But if you don't want to cancel your cover but do need to find ways to cut your premium, then you could choose to downgrade your plan with your current provider or switch to a provider with a cheaper package but with similar benefits to your current plan.
Dermot Goode of healthinsurancesavings.ie, a broker, says downgrading cover is certainly an option for younger people.
"They'd prefer to keep cover for both public and private hospitals but if the cost is prohibitive, they will drop down, reluctantly, to a plan that covers public hospitals only," he says.
"Because of the policy excesses in private hospitals and the restrictions on certain procedures, these plans will appeal more to the younger, healthier type of member."
Switching to a cheaper plan with another provider may be the better option if you still want the best cover but at a cheaper price.
"It would be fair to say that the vast majority of my inquiries are from people looking to preserve the cover they have, but cost saving is king right now," says Mr Goode.
"Loyalty to any one insurer has diminished significantly as cost is the main issue."
However, comparing packages is getting more difficult as insurers have been launching yet more products recently. There are now well over 200 possible plan combinations.
The good news is that the Health Insurance Authority (HIA), which regulates health insurers, has launched a new and independent price-comparison facility at www.hia.ie.
Aviva Health and Quinn Healthcare also offer price-comparison facilities on their websites, but the HIA facility allows you to compare all three providers at the same time.
Being the industry regulator, you can also expect it to be completely objective.
A third option has emerged that -- on the face of it -- could be the solution for those who are happy to downgrade some aspects of their cover but still want decent coverage for both private and public hospitals.
VHI Healthcare has launched two new plans, called 'One' and 'One+', which it says have been devised with cost-cutting consumers in mind.
It is aimed at those who still want comprehensive private hospital coverage offered by its most popular hospital plan (Plan B ) but who are willing to accept a number of trade-offs.
The main trade-off is a higher excess (€125) for in-patient care in private hospitals, while cover for orthopaedic procedures (hip, knee and shoulder replacements) is capped at 80pc.
The outpatient cover is also a bit more limited than Plan B, while private-hospital maternity benefits are also cut back.
The new plans start at €639 per person, which is an introductory offer until May 1 for current VHI members, after which it will cost €710. This compares to €907 for Plan B -- a saving of up to €268.
Goode says VHI's new plans are a response to the growing number of customers who are switching to its competitors, although he added that any cut-price alternative for those considering cancelling their cover is a good thing.
However, he is wary of what he regards as significant benefit exclusions in the new plans, such as for orthopaedic procedures in private hospitals, which will be a turn-off for older members.
He is also critical of the €125 excess for inpatient cover. "If you are receiving treatment already, two visits to a private hospital could wipe out your savings."
Mr Goode says you can purchase similar cover to VHI's Plan B from either Quinn Healthcare for €778 or Aviva at €780.
A spokeswoman for VHI says: "We don't believe the benefit exclusions are significant, it is merely a different choice.
"In order to help customers save on premiums, people have to look at their alternatives. This is one alternative."