If you have health insurance, there is a very good chance that you could renew your policy in the coming days.
An estimated half a million consumers renew their cover in January every year, but January 22nd is a peak day in the calendar, particularly for those who are VHI customers.
Many simply let their policies roll over from year to year, but by doing so, they are likely missing out on significant savings.
As a rule of thumb, if you’ve been on the same policy for 5 years or more, the chances are it is outdated and you’re probably overpaying for cover.
This year, there is an added incentive towards doing some legwork and shopping around as premium costs on many policies have increased substantially in the last 12 months, but there are likely savings to be found.
Medical Inflation
While inflation is on a broad downwards path across the economy, the cost of healthcare and its provisions have continued to mount.
Having peaked at close to 10%, general inflation has since fallen back to around 3%, as measured by the eurozone standard measure called the HICP.
But inflation in the healthcare and medical sector remains at up to three times that rate.
“Medical inflation, which is subject to different cost drivers than general inflation, continues to run at between 6% and 8% or even higher,” explained Dermot Goode of totalhealthcover.ie, a Lockton Group company.
“Medical inflation includes costs such as claims, new drugs, new technologies, and labor costs – all of which have increased substantially in price in recent years,” he added.
This has all fed through to health insurance costs, which in turn have increased dramatically over the past 12 months.
With cumulative increases from the different providers, policies have gone up on average by 15 to 20%.
As it is an average, some individual policies will have gone up by more, Dermot Goode explained, describing some of the increases as ‘colossal’.
How to find the best policy at the best price
With only 3 providers in the market – VHI, Irish Life and Laya – there’s not a huge amount of competition.
Between them, though, they have over 320 policies, which is a vast amount of choice and it makes it a tough task to select the right one for an individual or family’s needs.
The average premium across the market is €1,493 per year, according to the market regulator, the Health Insurance Authority (HIA).
Dermot Goode says €1,400 is around the point an individual aught to be aiming to secure a good level of annual cover for inpatient treatment, as well as for some day to day costs.
He identified individually across each of the providers that offer a good level of cover for that price point.
They are the HealthGuide 2 plan with Irish Life Health, the Inspire Plus plan with Laya Healthcare, and the PMI 52 10 or the PMI 07 10 with VHI.
“All you have to do is phone the insurance company, tell them your budget is €1,400, ask them what’s the best plan they have and ask them to look across all of their plans,” he advised.
“If you ask the right question, you’ll get the right deals,” he explained.
Dermot Goode said savings of the order of €500 to €1,000 could be achieved by certain policyholders who have been on older plans, sometimes for over a decade.
Growing markets
Despite steep cost of living increases in recent years, as well as rising health insurance premiums, it’s not an area of spending that people have so far chosen to cut out completely, it appears.
According to figures from the Health Insurance Authority, 2.44 million people had health insurance at the end of 2022.
That represented a 3% increase on the previous year and equated to just over 47% of the total population.
It marked a continuation of a trend that has taken hold for much of the last decade.
Despite expectations to the contrary, the number of people with health insurance cover actually grew during the pandemic.
It was thought many households, especially those who may have been under pressure from temporary job layoffs, might have chosen to ditch their cover.
But it appears the pandemic had the opposite effect. The sight of over-crowded healthcare facilities and the prospect of long waiting lists in the public system appeared to demonstrate to people the value of having some level of health insurance cover.
Tens of thousands signed up, bringing the number of people insured back to 2008 levels, where it had peaked before falling for the first time in decades at the onset of the financial crisis.
That could change when the 2023 figures are published but so far, wider inflation concerns have had a relatively muted impact on the market.
Changes to the market
A key contributor to the growth seen in the last decade has been the policy of Lifetime Community Rating.
This is a system of price equality for all members which relies on younger people – who tend to have fewer healthcare needs – signing up for insurance and essentially carrying the costs for older members who are likely to need to draw on their insurance more frequently.
In order to sustain this model, a loading mechanism was introduced in 2015 which penalized late entrants to the health insurance market.
“A loading of 2% of the gross premium will apply for every year of age higher than age 34 that an individual has attained when they first purchase inpatient private health insurance,” the HIA explains on its website.
It appears that the policy has had the desired effect.
People have been signing up to the market at a younger age and are staying in it, even if they occasionally opt for basic cover either to start off with or to cover periods of tight budgets.
The numbers opting for the basic plans are small with HIA figures showing that 93% of holders of private health insurance are on what are called ‘advanced plans’ with access to public and private hospitals.
This metric will be keenly watched as updated figures are published as a guide to whether consumers are scaling back on cover to prioritize more urgent payments like mortgages or other insurance products, the cost of which is also steadily increasing.
The road ahead
More cost hikes are likely in the coming months, Dermot Goode believes.
And indeed premium increases have already been levied in 2024 with Irish Life Health increasing prices on most of its plans by an average of almost 5% on January 1st.
VHI and Laya also introduced hikes to a range of corporate plans at the start of the year.
“We always look at previous trends. In early 2023, Irish Life went up on January 1st. They’ve done it again,” explained Dermot Goode.
“VHI went up on March 1st last year. We’ve no notification, but we’re expecting an increase in the coming weeks from them,” he added.
On the basis of the Irish Life increase and the assumption that they’re all being impacted by the same cost drivers, Mr Goode said increases of the order of 3 to 5% could be expected early this year.
“If there’s any good news in that, it’s that the vast majority of customers will have been renewed by then so it may not impact them on this year’s renewal,” he added.
Beyond that, there’s a little good news for consumers on the health insurance front.
Medical inflation is back and claims costs are soaring, both in volume and the quantum of the claims.
The one thing that’s keeping the market in check right now is the high proportion of the population that has health insurance policies.
Should that show signs of decreasing in the coming years, particularly among younger members, additional and steeper price increases could not be ruled out for some time to come.