Smart Consumer: Is it time to give up on your health insurance?
Published 20/01/2012 | 06:00
As health insurance costs continue to spiral out of control, more and more people are opting out of private health cover -- but what are the health and cost implications if someone gets sick?
Also, what will the influx of additional users mean for an already overburdened public health system?
1 What is the current state of health of the private health insurance market?
Private health insurance premiums have risen by almost 50pc in the past two years and are expected to rise by at least the same again following changes to hospital charges and a hike in the levy.
The first quarter of the year is traditionally the busiest time when approximately 850,000 of the estimated two million-plus who have insurance cover are due to renew their policies.
Quinn Healthcare costs have gone up by an average of 12pc from January 1 with some plans going up by over 20pc.
VHI announced a 2pc increase last November on top of a 45pc increase introduced a year ago. Further increases are expected next month.
Aviva meanwhile are increasing their prices by 23pc in two hikes last year and a further 15pc this year.
2 Why are prices rising?
Insurance companies blame rises in the cost of private beds in public hospitals and the cost of private hospitals and consultants. They also cite medical inflation and the health insurance levy as reasons for the price hikes.
Another factor is the increased demand in medical care in part, at least, because outcomes of once fatal conditions have improved.
3 How many people are pulling out?
An estimated 6,000 people a month are abandoning health insurance policies.
Since the start of the recession, 123,000 people have terminated their cover leaving 2.17 million still in the market.
4 Is this trend expected to continue?
In a word, yes. The government levy increase will also be passed on to beleaguered policy holders and could hike premiums by up to 40pc.
This will mean that a family of two adults and two children could have to pay an additional €220 annually.
Insurance companies have also warned that charges for private beds in public hospitals, if implemented in full, will result in increases of at least 50pc.
These additional rises could lead to a further 100,000 people cancelling their cover this year.
The Irish Patients' Association (IPA) has speculated that the cost for an average family of four could be between €7,000 and €8,000 a year in six or seven years, making it an unaffordable option for many.
In a recent online survey on irishhealth.com, 33pc of respondents indicated they could not afford to renew their insurance polices. A survey just released by the Irish League of Credit Unions revealed that 31pc warned they would ditch their cover if there were further premium increases.
However, Health Minister James Reilly is continuing to insist that his policy will drive down the cost of insurance.
5 What are the implications of a decline in private health insurance take-up?
With the public health system already under-resourced and oversubscribed, it will struggle to cope with an increased influx of patients.
This will result in longer waiting lists and poorer outcomes for patients.
Stephen McMahon of the IPA warns that pulling out from private health insurance has huge implications for the public system.
"They fall on a very overstretched public healthcare system and, to be very blunt, from a healthcare economic point of view, they transform themselves from being a welcome income generator to the health system to be a cost burden," he said.
6 So is it worth keeping health insurance?
Having insurance is beneficial when it comes to accessing private and semi-private rooms in public hospitals and any stays in private hospitals.
Getting to a private hospital usually means avoiding queues and waiting lists. It also gives you access to more hospitals and more treatments.
A patient needing medical treatment without health insurance is faced with the choice of going into the public system or funding private healthcare themselves.
And, contrary to popular perception, unless you have a medical card, or are exempt for certain medical conditions, public healthcare is not cost-free.
The cost of a bed in a public hospital is €75 per day, up to a maximum of €750 in a 12-month period.
A private bed in a public hospital can vary in cost from €260 to €1,017 per night. The cost of a semi-private bed can range from €222 to €889 per night while day-care costs can range from €193 to €732.
The cost of seeing a consultant can vary from €150 to €300, though even those with health insurance can be hit with consultant charges.
Surgery costs can also be considerable.
Operations for appendicitis or tonsillitis could cost around €5,000. A hip replacement could cost more than €16,000 while a pacemaker could cost over €30,000 and a heart bypass €40,000.
A day procedure in a private hospital for something as simple as getting a mole removed could cost up to €1,000.
7 What then are the implications of pulling out?
Patients in the public system, who are diagnosed with relatively minor conditions such as a blocked artery or a bad hip, can be left waiting months or longer to see a consultant and access treatment.
However if you are diagnosed with a serious, life-threatening condition you will be treated with priority.
Paying directly for treatment could put a patient or family into serious debt.
8 What are the alternatives?
You have the right to switch health insurance provider without incurring penalty or having to reserve waiting periods. You also have the option of reducing the level of cover you have.
Private health insurance expert Dermot Goode, founder of healthinsurancesavings.ie, points out a basic health insurance plan can cost as little as €495.
"This idea of putting aside a few bob to cover rainy day rather than taking out insurance, just doesn't work. Firstly, you won't do it and secondly, your savings could be wiped out with one small minor admission," he said.
He points out that there are over 200 plans across three insurance companies, some of which offer great value.
Goode advises against contacting insurance companies and telling them you cannot afford your current plan.
"You are better phoning them up and saying: 'I have two adults, two children and €1,800 to spend. What can you give me?'
"They have to go and come up with a mishmash of plans to fit your budget.
"I do presentations all the time and 60-70pc of the people I present to are all on the wrong plans and don't fully understand what they are on," he said.
The Health Insurance Authority website hia.ie shows price and cover comparisons between various plans.
Individuals also have the option of switching to often discounted corporate plans.
The Hospital Saturday Fund cash-back plan is a cheaper alternative to health insurance with optimum cover at a cost of €55 offer grants of €120 per hospital night.