Thursday 14 December 2017

Price war helps usher in new era of cut-price health cover

WE have entered a new era for health insurance.

It is one where, instead of multiple premium price rises, the four insurers are now engaged in the biggest price war we have ever seen.

And it is a welcome turnaround from a situation where there were times when it was not unusual for two premium rate rises to be announced in a month.

There is a big prize at stake and insurers have decided to go hell for leather to win it.

The prize is what is expected to be up to 60,000 people taking out health insurance for the first time.

This will add to the almost two million people who already pay dearly for their cover.

Thousands of people are expected to join the market before May 1, when new penalties apply to those over the age of 34 taking out cover for the first time.

Known as lifetime community rating, this is an attempt by the Government to encourage people to take out health insurance earlier in life and to control premium inflation across the health insurance market.

Under the existing community rating regime everyone pays the same price for a policy with similar benefits, irrespective of how old or healthy they are.

Lifetime community rating will penalise those who leave it until later in life to take out cover.

The penalty will be 2pc on the policy price for every year the person is over the age of 34.

This means a 50-year-old taking out cover for the first time will be hit with a 32pc charge on top of the premium price.

In a bid to capture some of those taking out cover for the first time, VHI and Laya and now GloHealth are launching cheap plans.

Aviva is expected to have a new plan soon, at a cost of €435 a year, and some additional benefits.

These new plans are expected to prove attractive to younger people. But caution is required.

The plans are cheap for a reason.

Essentially, they are stripped-down versions of what might be regarded as traditional health plans.

Costs have been slashed so they can be priced as little as €8 a week, by cutting out cover in private hospitals.

And not all public hospitals are covered in these plans.

With the new GloHealth plan, Base, you have to pay the hospital if you have treatment, and make a claim to the health insurer later.

However, there is an option to upgrade to a higher-level plan without having to serve a waiting period.

The big advantage of these plans is that for low prices they will allow you to skip public hospital waiting lists and get access to treatment as a semi-private patient.

The big risk here for insurers is that they will cannibalise their own market as some of those with existing cover will be tempted to downgrade to these new plans, especially if they are young and healthy.

But for consumers, the advent of new cut-price plans is a welcome relief from ever-rising premiums.

Irish Independent

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