'No-frills' health cover set to spark price war
A NEW breed of no-frills health insurance is set to ignite a price war between providers for the first time in years.
Insurance giants, including Aviva and VHI, are poised to offer a range of stripped-down plans for a reduced price in a bid to stem the flow of thousands of young families giving up medical cover.
It will offer a chance for many cash-strapped consumers to continue to hold on to medical cover after five years of rapid price rises.
But the cut-price health plans will come at a cost in terms of the number of hospitals covered. Some procedures will also require extra payment from the patient.
The move to introduce new plans that restrict the use of some hospitals is also an attempt to short-circuit plans by the Health Minister James Reilly.
The minister intends to charge insurers every time their customers use a bed in a public hospital.
Aviva will kick off the price war today by launching a range of cut-price plans.
They are mainly aimed a younger families that have been forced to drop out of the market due to escalating premiums.
Some 200,000 people have dropped out of the market in the past five years, with most of these under the age of 40.
Experts said the move by the third biggest player in the market would stem this tide, and spark a price war.
But they warned the new plans will not suit people with health issues, as they will be forced to make a contribution towards some procedures.
The new, cheaper health insurance plans come after each of the four health insurers imposed price hikes in the past six months.
Overall, the cost of the average premium has jumped since 2008 by 45pc to more than €1,000.
Aviva's new plans will cover both private and public hospitals. Not all hospitals will be covered and consumers will have to partly pay for some procedures, but the main new plan is as much as 20pc cheaper than similar plans.
The move is set to herald a huge shake-up in the market as insurers refine their plans to ensure they can offer better value to consumers.
Experts said rivals VHI, Laya and Glo Health are set to mimic Aviva with the launch of new cheaper, stripped-down plans.
Insurers are opposed to plans by Dr Reilly to charge insurers up to €1,122 a night in a public hospital, even if the policy holder only gets a public bed.
They argue this will push up the cost of premiums by 30pc and force 300,000 people to ditch their health cover.
VHI has already said it was ready to launch a range of new plans that would heavily restrict the hospitals that people could be treated in if the Government went ahead with these plans.
The cheaper policies would see customers having fewer choices about the number of public and private hospitals they can use.
Each geographical area would have a small number of public and private hospitals covered under the new plans.
Aviva's managing director, Alison Burns, said her company was responding to customer demand after an intensive survey of 2,000 people who had private medical insurance.
There will be six new Aviva plans, including three which are priced to under-cut its rivals, the Irish Independent has learned.
The new First Focus plan will cost €765 a year for an adult, €200 cheaper than similar rival plans.
The Family Focus plan offers cover for children aged between five and 17 for €150 a year.
Dermot Goode, of Healthinsurancesavings.ie, said the Aviva move was good for families and, in a bid to stem the loss of younger consumers, others would be forced to match it.
"These new plans are good news for anyone who is considering cancelling or downgrading their health cover, especially if they have children," he said.
He said there was a good spread of public and private hospitals covered, even though many hospitals were excluded.
He said around 60pc of all hospitals were covered.
Private hospitals not covered include the Bons Group in Kerry and Cork. Public hospitals such as Mullingar General, Cappagh, James Connolly and Wexford General are either not covered or only covered on the higher plans.
However, if people are brought to an A&E by ambulance to a hospital not on the list, the six new plans will cover the cost of the stay and the procedures.