Why health cover isn't delivering
Published 02/02/2014 | 02:30
The shock closure of Mount Carmel, which delivered its last baby yesterday, is only the latest of a long list of crises to hit the private health sector. And with more premium hikes announced this week, is it any wonder 250,000 people have quit?
Tara O'Connor is due to give birth on Thursday. But it will be the Coombe, rather than Mount Carmel, where she welcomes her second child.
She missed the cut-off point by less than a week. Yesterday marked the final day for births at the private hospital in south Dublin, which had first opened its doors in 1949.
Mount Carmel is the most significant indicator of how beleaguered Ireland's private health service has become. Having thrived in the Celtic Tiger years, the hospital's 300 staff have been made redundant and face an uncertain future in an environment that has seen a cap on recruitment.
With the hospital in NAMA control and in debt to the tune of €35m, it was always going to be an uphill task to stay afloat.
Mount Carmel's woes serve to put extra strain on the capital's already over-stretched maternity hospitals. And the Beacon Medical Group's ambitious 2010 plan to build a 127-bed private maternity hospital in Sandyford, south Dublin, has been shelved.
Other exclusive hospitals are feeling the strain, too – including the Mater Private, which has been tied up in labour relations disputes over 95 redundancies and the closure of a pension scheme.
While health insurance was a basic necessity for many in the boom years, the so-called squeezed middle have had to make tough choices – especially as premiums have doubled since 2008. It is thought that 6,000 people per month are abandoning expensive policies, with more than 250,000 former private customers now in the public health system.
And this week, with the country's largest insurer, VHI, announcing that it was putting up the prices of some of its plans by 6pc, and Laya Healthcare introducing a 20pc hike, it is certain that yet more will not renew their policies.
Catherine Whelan, CEO of the Independent Hospitals Association of Ireland (IHAI), says the sector is facing "its most challenging period to date. And it's not just people quitting health insurance, but the figure that we're never told about is the tens of thousands who are downgrading their policies".
She added: "There is a perception out there that difficulties experienced by private hospitals has no impact on the public system, but that's not the case at all. It puts it under even more pressure and that's borne out in the facts that 45,000 are waiting for elective procedures and more than 378,000 are waiting on a first appointment with a consultant."
Insurance expert Dermot Goode says "the elephant in the room" is the decision by Health Minister James Reilly to charge patients with private health insurance for public beds.
"Rather than the existing €75 fee per night, insurance companies are having to pay €813 for those public beds. That will cost the industry €140m in 2014 alone – so it is a certainty that further hikes are on the way for beleaguered customers. And then there's the fact that from March 1 health insurance levies, introduced by the minister, go up by 15pc. What that all means in brass tacks is more than €700 extra per couple who are on one of the more comprehensive plans," he adds.
Mr Goode says it is "unsurprising" that the closure of private hospitals such as Mount Carmel is making those most likely to abandon health insurance – the 25 to 34 age group – rethink what they are getting for their hard-earned cash.
Those views are echoed by Tara O'Connor. "It's a vicious circle," she says. "But the decision to close it is very short-sighted – and it takes away choice for women who want a different experience to the other maternity hospitals in the country."
The Dublin-based public relations consultant had her first child, JP, at Mount Carmel and felt it was worth every penny. "It was first-rate," she says. "As it should be when you are paying for private health insurance."
Genevieve MacKenzie, who had two children at Mount Carmel in 2006 and 2010, says its closure may encourage yet more people to abandon the private health option. "Some people will be asking themselves if it is worth the expense," she says, "when the element of choice is taken away.
"I'm one of those who feels that it is very important to have health insurance and if that means not upgrading the car or putting off family holidays, so be it. It's a priority for me and my family and I was lucky that I was able to have my children in Mount Carmel because the experience there was second to none."
Ms MacKenzie says the €4,000 bill for each birth – on top of the health insurance premium – was comparable to the fees she would have expected to pay in the private wings of Holles Street or the Rotunda.
"People could be quick to label Mount Carmel as a hospital for the privileged, but I always thought that was very unfair. What it was, was a wonderfully patient-centred place, where you didn't feel rushed and where no issue was too trivial.
"I'm fortunate to have had my family while it was still open, but that option won't be there for my younger sisters and I feel it is a great pity."
Dublin-based Australian Karinda Tolland gave birth to a baby girl in Mount Carmel at the end of December. Having seen family members experience top-level maternity hospitals in her native country, she was taken aback by the standard in Ireland, where overcrowded, under-resourced facilities are the norm. Mount Carmel, she says, looked like being a cut above the rest.
Despite this, she was not as enthused about Mount Carmel as she had expected. "People talk about it being like a five-star hotel, but it was nothing of the sort. The staff are very good, but semi-private there tends to mean six-bed wards and then there were smaller irritants like the cafe being closed. Had it remained open, I would certainly think twice about having another child at Mount Carmel."
Ms Tolland did not have health insurance for her first six years in Ireland, and can appreciate why for so many it is a price too far. "The premiums are being hiked up all the time," she says. "It's no surprise why people are opting out."
One of those is John Ryan, a former VHI customer – whose unhappy experience with the insurer after he damaged his knee playing football encouraged him not to renew his policy.
"I had heard [the consultant] Gary O'Toole was very good at this operation," he says, "but VHI wouldn't cover me for Beacon Clinic and when I was told he could do the operation at Cappagh Hospital I was told it wouldn't happen for eight months because I was on the public waiting list. It made me think: 'Why am I paying the best part of €600 ever year when I could have paid €75 for a night in hospital as a public patient and get the same service?'"
A VHI spokesperson says Mr Ryan's "entry-level policy provides customers with comprehensive cover for public facilities but does not provide cover in private hospitals.
"One of the key reasons customers purchase private health insurance is for the choice as well as speed of access," she says. "In this instance, the customer could choose to receive treatment under a different consultant operating in a different public hospital, with potentially shorter waiting times".
But Mr Ryan is not for turning. "I'd be looked after if something serious was to happen as a public patient. I'm satisfied with that."
Meanwhile, up to 400 women who had been due to give birth at Mount Carmel over the next four months have been left to wonder about what might have been.
"To say I was saddened to hear Mount Carmel Hospital is closing would be an understatement," says Vanessa Drennan, who is 20 weeks pregnant and is due for her next scan on February 18. "Our daughter Holly was born in Mount Carmel in 2009. I was looked after so well in such a lovely environment that I didn't feel like I was in a hospital at all. I am very saddened our second won't be born there. I really wish some miracle could happen so that the hospital can remain open."
It's protection money, but at my age I am too scared not to pay it. . .
This is fast becoming no country for old men, says Derek Davis.
So Mount Carmel is soon to be no more unless someone with deep pockets and a philanthropic nature steps in, or the State sees the advantage of keeping a team of skilled medical people and good hospital beds in the system.
Of course it won't happen because we live in a post-troika era where balancing the books is the priority for every department. If you think it is no loss to the HSE and its clients, remember that Mount Carmel conducted thousands of procedures for the HSE to help shorten the outrageous waiting lists.
It is clear that the private hospitals are in trouble because so many people are letting their insurance lapse. Some of this is due to our difficult economic situation as the Government leaves less and less disposable income, and some of it is down to the insurance companies who, like the energy providers, have a bewildering range of 'plans', designed, one suspects, to bamboozle the unwary.
This creates a 'sod 'em' attitude amongst their customers, especially old coves like me who are running out of cash and patience.
Will I be letting my insurance lapse as my pension is whittled away? No.
The reason is fear. That health insurance is protection money and we know from a thousand movies what happens when we don't pay our protection – bad things!
Show me the pensioner who asserts, 'I've never been sick a day in my life' and I will show you someone who hasn't had a check-up recently.
We are a bit like old cars – as the years go by we need a bit more maintenance, and if we let a small problem go unattended, it can rapidly become much more serious.
Waiting lists cripple and kill. With Mount Carmel closing, those lists will get longer, and it is my experience that the older one gets the further down the list one ends up.
The way to get the treatment you need to get the attention necessary to sustain life, or the quality of a life free from pain, is insurance, and a bit more than basic cover, too.
The great snag is that as more and more young, fit people bail out of the system, there are more claims and less cash to pay them – you can complete the equation yourself.
It was as if there was no joined-up thinking in government departments. Why do the French, who have a superb system, managing with, per capita, half the number of 'managers'? It is a fact that rich French people pay more tax than rich Irish people and no one bothers with private insurance because there are no waiting lists.
A few years ago on a trip to Normandy, a pal in his 60s had a severe shoulder pain.
He was seen right away by the local GP. The doctor conducted a check-up lasting 45 minutes which included two ECGs. The bill was €32 and the prescription for painkillers €2.40.
This is rapidly becoming no country for old men. We are down the triage list and running out of the cash to pay our protection money. Bad things will happen.
It's like being faceless when you are in a public hospital'
Kildare-based beauty therapist Meav Doyle (33) is 28 weeks pregnant with her fourth child. She chose to go private this time and she got a shock when she turned up at Mount Carmel this week.
'When I confirmed with my GP I was pregnant for the fourth time, she said to me the three major maternity hospitals are so manic now it'd be calmer and I'd have easier care in Mount Carmel.
"I was public for the births of my first two and then semi-private for the third but I still ended up in a public ward.
"It's like being faceless when you are in a public hospital and you're going to the clinics. But you can understand it, they are trying to see thousands of people every year.
"The last time I was quite upset. It was manic. I just thought this time would be calmer, but it's not working out that way now.
"From about six to 12 weeks pregnant I was in and out of the hospital on a drip. The staff at Mount Carmel just couldn't have been kinder. I walked straight into a private room, I couldn't believe it. Going into a public hospital you could be there for three or four hours getting sick in a bowl before you get put into a bed.
"It was very chaotic on Monday morning in Mount Carmel. There were people turning up who didn't have appointments. There were women clearly very distressed and hysterical.
"The staff were very upset. There was one women working there since 1990. She said she can't imagine going anywhere else.
"I'd been worried about transferring over to one of the national hospitals, because this baby is measuring big, that maybe I'd be forced into an induction.
"It would be really scary because the child could be 10 or 11 pounds. In Mount Carmel I was going to come in a week or two early.
"On Monday, though, my doctor was able to confirm she was moving to the Coombe and she said it'll be like Mount Carmel in the Coombe and it'll all be private under her care. So I'm delighted. But I know there are others who haven't had any contact yet at all."
In interview with Fiona Ellis
Expert view: We're past the point where cover made sense for the average family
Why are health insurance costs rising? Insurance companies are essentially telling us their costs are going up, and so they are transferring those costs to their customers in the form of price hikes.
They are being charged by public hospitals for bed usage, their insured population is changing as younger people on lower incomes are pushed out of the market, increasing the proportion of likely claimants, and the Government has whacked them with a health insurance levy. As costs have risen, so have the prices charged.
The VHI has increased its prices six times since 2011. Laya Healthcare has just increased its prices by an average of 20pc.
Health insurance in Ireland is a means to skip queues when you or your family wish to seek medical care. The healthcare system is bound up in overlapping public and private provision of care. My colleague at the University of Limerick, Dr Gerald O'Nolan, has shown that the public and private provision of health care or 'mixed delivery' has operated side by side for hundreds of years here.
Health insurance is not a luxury good for older people, but it is for healthier younger people. As their disposable incomes have dropped due to increasing taxes and decreasing incomes, they have lost their ability to afford private health insurance.
Say you are a one-income household with two parents in their 30s and two children under 16, taking home €40,000 after tax. A basic health insurance plan in 2011 represented less than 10pc of your annual income. Today it represents close to 20pc. Many people are simply opting to take a chance on the public service.
The result from the health insurer's perspective is simple: those with a lower chance of claiming are exiting their pool of people who pay premia, while those with a higher chance of claiming – older people and those with chronic illnesses – are staying insured.
As the economy grows and more people get back to work, this dynamic should partially reverse itself, but incomes will fail to keep pace with price rises overall, meaning the private health insurance market will become, more and more, a luxury good enjoyed only by the wealthier elements of Irish society.
Stephen Kinsella lectures in economics at the University of Limerick