There is no miracle cure for rising health insurance premiums, but there might be ways to ease the pain. 

First published in the Business Post on 16 February 2024.

There has been a steady run of bad news of late for those with private health insurance or those who would like to have it.

In January, Irish Life Health’s coverage plans increased in cost by an average of just under 5 per cent and last week Vhi, the country’s largest provider, announced that its premiums would increase by an average of 7 per cent from March 1.

These developments were unlikely to have been welcomed by households already battling a cost-of-living crisis, but they came as little surprise.  

Both providers and Laya Healthcare had already implemented multiple increases in the last 18 months, equating to double digit rises in many cases. 

The price hikes can be attributed to many factors. All three insurers are reporting significantly higher usage levels of healthcare services compared with previous years, which were dominated by restricted access due to the Covid-19 pandemic. 

While noting increased efficiency, particularly in private and hi-tech facilities following the removal of Covid restrictions, insurers are also citing the impact of delayed treatment during the pandemic.

Medical advances and technological innovations have improved healthcare outcomes, but have also contributed to rising private health insurance costs. So too have higher hospital and consultant fees, new treatments and high-cost medications and medical devices. This, in turn, has led to an increase in the cost of claims, which insurers must account for when setting premiums.

Together with an inflationary environment and significant increases in the cost of living, these factors have combined to create the price rises, which we expect to continue throughout this year.

Given this situation, one might expect a significant drop in the number of policy holders, but this hasn’t been the case.

According to the Health Insurance Authority (HIA), which regulates the private health insurance market, just under half the population in Ireland (45%) hold private health cover. Of this number, 35% are in an employer group scheme, while 44% of this cohort have policies that are fully funded by their employer.

Even though private medical insurance is typically the largest benefit spend for companies, corporate customers are not removing or reducing this benefit for their employees as it remains a valuable talent attraction and retention tool.

In a 2023 survey, the HIA found that 60 percent of respondents considered healthcare cover as a necessity and not a luxury. A majority believed that it increases access to services and lowered waiting times. 

Given the perceived and real benefits for individuals and corporate customers, it makes sense for existing and would-be policy holders to consider ways to manage costs while ensuring adequate cover. 

Doing so, however, is a significant challenge in a complex market comprising approximately 350 plans across the three providers.

Individuals and corporate clients cannot prevent insurers from raising premiums, but there are some strategies that can and should be considered to help get the best deal.

First, it’s vital that policy holders review their health insurance regularly. If policyholders have not reviewed and made changes to their plan or insurer in recent years, they are quite likely paying too much for their health insurance. It may be possible to reduce a premium by simply adjusting cover to better align with a person’s needs. When renewing, it’s worth asking a provider about new plans that may offer comparable cover at a more competitive rate. A good strategy here is for members to consider and decide on how much they can afford to spend before this discussion with their current insurer. They can then simply ask the provider for as close a plan to their current one that matches their budget.

It is also important to shop around and not be afraid to change provider. Once waiting periods have been served, a policy holder will not have to serve them again if switching to another insurer as long as there hasn’t been a break in cover of more than 13 weeks.

Choosing a higher excess or co-payment plan can also help lower premiums, although it’s important to fully understand all terms and conditions as some co-payments for orthopaedic, ophthalmic, and cardiac procedures may mean the plan in question is not suitable.

Another approach is to assess the level of plan involved. Do all family members, for example, need the same level of cover? It can be worth considering alternative plans for children with a more appropriate level of cover and a more competitive price. Does the whole family need access to a private room in a private hospital? Semi-private access may suffice for one or all family members. Young children on the policy may be covered sufficiently with public hospital coverage. Assessing these needs and plan choice accordingly can really help in securing appropriate cover at a more competitive price.

The health insurers offer deals on certain plans from time to time. These special offers and discounts can include percentage discounts on selected schemes, discounted rates for child cover and free cover for the second plus child. Such promotions can have a real impact of costs for families renewing or taking out private health insurance in Ireland. It’s always worth policyholders exploring these offers with insurers to see if these plans can offer an appropriate solution to their coverage needs at a more affordable cost. Finally, opting for a restricted network can be a good idea. Some health insurance plans offer lower premiums if you agree to use a limited set of healthcare providers or hospital locations depending on where you live. This can mean reduced options when it comes to choosing doctors or hospitals, but it can also help reduce costs.

The price, of course, is not the only consideration when appraising cover. A regular review of plans will also safeguard access to the most up-to-date benefit enhancements and market innovations.

Switching plans, may provide better access to offerings as diverse as fertility treatments, menopause support, clinician-led concierge services and digital access to GP, physiotherapy, and other services.

Fergal Martin leads the Health Consulting team at Mercer Ireland with responsibility for plan design, benchmarking, and evaluation of healthcare provision for their client’s employees. The team also supports the development of employee wellness programmes including employee benefits communications.