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Health insurance price increases are back, but customers getting more

Our snapsot of the healthcare market in Ireland

Health and Benefits|Future of Work
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By David Glennon | March 18, 2020

Willis Towers Watson provides a snapshot of the Irish healthcare market and where prices are now whilst also highlighting what benefits are coming to market from providers.

In recent years we had been enjoying a period where all three health insurance providers, VHI, Laya and Irish Life Health have been engaging in a price war. They have avoided increases on their plans and in many cases, customers saw the price of their health insurance plans fall.

This came after several years of increasing healthcare costs which saw premiums increase by double figures every year. Indeed in 2014, we saw some providers increase rates by up to 40%. Perhaps not coincidentally, 2014 also saw the lowest numbers of people in Ireland with health insurance which had been declining from their pre-financial crash high of almost 2.4 million in 2007.

Up until 2017, price increases were a regular and normal event by all 3 providers, so the price war of 2017, 2018 and early 2019 was an irregular but welcome occurrence.

Up until 2017, price increases were a regular and normal event by all 3 providers, so the price war of 2017, 2018 and early 2019 was an irregular but welcome occurrence. As with most situations that are irregular, it wasn’t going to last and in 2019 we saw price increases return. VHI, Laya and Irish Life Health all announced price increases in 2019 and again all have announced increases early in 2020. The increases announced in the first quarter of 2020 are unfortunately unlikely to be the only increases that we will see this year.

Further increases are expected in 2020 from all 3 providers and customers should expect an increase of approximately 6% this year.

VHI increased premiums by an average of 6% in 2019 and their first increase of 2020 saw an average increase of 2% across their plans. Laya increased the price of their plans by an average of 5.3% with a further increase of 1% announced in 2020. Irish Life raised prices by 5.3% in 2019 and their initial price increase for 2020 was 4.4%. Further increases are expected in 2020 from all 3 providers and customers should expect an increase of approximately 6% this year.

This forecast does not take into account potential impacts from the COVID-19 outbreak. It is impossible to gauge at this point what the implications will be, however it is likely that our healthcare system could be coming under increasing pressure in the coming weeks and months and this will include the private healthcare system.

So, what is the reason for these price increases? As we have seen with other types of insurance, it is the increasing cost of claims. With our ageing population and increased demand on medical services, the cost of providing care has been increasing year on year. This will naturally have a knock-on effect on the cost of managing claims. Figures sourced from VHI for 2018, showed that 5 areas accounted for 50% of their claims in that year. The big 5 were cancer, cardiac, orthopaedic, digestive and respiratory.

It is not just the cost of claims that are increasing, the volume of claims received by the providers is also on the rise. Data provided by Laya Healthcare show that the number of claims they received increased by 34% during the years 2015 to 2018. There are several reasons for this increased volume of claims. The primary reason is that more people are seeking treatment in Private hospitals to get around the increased waiting times in the public system. Laya Healthcare’s data shows that the cost of treatment in Private and Hi-Tech hospitals increased by 43% between 2015 and 2018.

All providers are also seeing a large increase in claims for day-to-day medical expenses such as GP visits. The ability to quickly and easily submit these claims through their smartphone has been a significant contributor to this increase.

There is also another important factor to consider and that is the transition of the nature of the market from insurance to healthcare. Historically ‘free’ treatment in public hospitals was not available to everyone until the introduction of universal coverage. Even after this introduction, people still sought health insurance as way of accessing private treatment. Traditionally plans provided by health insurers were limited to providing cover for consultant treatment and hospital accommodation for private patients. The main difference between plans was whether the patient was provided a semi-private room or a private room or if they would be covered for certain private hospitals.
For many people this type of in-patient cover is still very important, but customers are demanding more from their healthcare plans. People can now claim for day to day medical expenses for everything from GP costs to acupuncture sessions. Healthcare plans have kept pace with modern technological developments with access to advanced treatments and diagnostics. They have also adapted to take heed of evolving healthcare needs with cover provided for fertility treatments and gender reassignment.

The healthcare providers are not just covering more treatments, they are getting into the business of providing care too. The VHI SwiftCare Clinics have been around since 2005 and there is now two clinics in Dublin and one in Cork with a new clinic to open in Limerick later this year. The SwiftCare Clinic were open to all but in 2017 it was announced that access to the clinics would be restricted to VHI members only. Laya Healthcare have opened clinics in Dublin and Galway with a Limerick clinic scheduled to open before the end of 2020. Unlike SwiftCare Clinics, the Laya Health and Wellbeing clinics are open to non-Laya members.

Providers have also greatly increased their digital wellness capabilities, proving a range of online tools to help members improve and manage their healthcare. For companies offering workplace wellness programs, supported by the health insurer, can have a meaningful impact on the health and wellbeing of their employees.

As a rule, if you haven’t’ reviewed or changed your plan within the last 3 years, there is a fair chance that you are paying too much for your plan.

It is obviously a great benefit to customers that they can now avail of a much wider range of healthcare services and benefits. This does not mean that they shouldn’t be more vigilant with regards to cost and price increases. As a rule, if you haven’t’ reviewed or changed your plan within the last 3 years, there is a fair chance that you are paying too much for your plan. All 3 providers are frequently changing existing plans or bringing out new plans which means you may be missing out on more competitive pricing or higher benefits. With prices on the increase after a period of stability, it is particularly important to keep an eye on your healthcare costs.

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