If you have health insurance, there is a very good chance that your policy will be renewed in the coming days.
An estimated half a million consumers renew their coverage each January, but January 22 is a peak day on the calendar, especially for those who are VHI customers.
Many simply leave their policy renewed from year to year, but by doing so, they are likely to miss out on significant savings.
As a general rule, if you’ve had the same policy for 5 or more years, it’s probably outdated and you may be overpaying for coverage.
This year, there is an added incentive towards doing some shopping and with premium costs on many policies having increased significantly in the past 12 months, but there is likely to be savings.
Medical inflation
While inflation is on a broad downward path throughout the economy, the cost and provision of health care has continued to rise.
After peaking at near 10%, headline inflation has since fallen to around 3%, according to the euro zone’s standard measure called HICP.
But inflation in the healthcare and medical sectors remains at a level of up to three times that rate.
“Medical inflation, which is subject to different cost drivers to general inflation, remains between 6% and 8% or even higher,” explained Dermot Goode, of Lockton Group’s Totalhealthcover.ie.
“Medical inflation includes costs such as claims, new medicines, new technologies, and labor costs – all of which have risen significantly in price in recent years,” he added.
All of this has led to increased health insurance costs, which in turn have increased significantly over the past 12 months.
With cumulative increases from various providers, policies increased on average by 15 to 20 percent.
Because it is an average, some individual policies will rise by a greater percentage, Dermot Judd explained, describing some of the increases as “massive”.
How to find the best policy at the best prices
With only 3 providers in the market – VHI, Irish Life and Laya – there is not a huge amount of competition.
However, between them they have over 320 insurance policies, which represents a large amount of choice and makes it difficult to choose the right policy for an individual or family’s needs.
Average premiums on the market are €1,493 per year, according to the Health Insurance Authority (HIA), which regulates the market.
Dermot Goode says €1,400 is roughly the limit one can aim for to secure a good level of annual cover for inpatient treatment, plus some day-to-day costs.
He has identified individual policies across each of the providers that offer a good level of coverage for that price point.
They are a HealthGuide 2 plan with Irish Life Health, an Inspire Plus plan with Laya Healthcare, and a PMI 52 10 or PMI 07 10 with VHI.
“All you have to do is call the insurance company, tell them your budget is €1,400, ask them what their best plan is and ask them to look at all their plans.”
“If you ask the right question, you’ll get the right deals,” he explained.
Dermot Judd said savings of between €500 and €1,000 could be made by some policyholders who had been on legacy plans, sometimes for more than a decade.
Growing market
Despite sharp increases in the cost of living in recent years, as well as rising health insurance premiums, this appears to be not an area of spending that people have chosen to do without quite yet.
According to figures from the Health Insurance Authority, 2.44 million people have health insurance at the end of 2022.
This represents a 3% increase on the previous year and equates to just over 47% of the total population.
It was a continuation of a trend that has prevailed for much of the past decade.
Despite expectations to the contrary, the number of people with health insurance coverage has increased during the pandemic.
It was believed that many families, especially those who may have been under pressure from temporary layoffs, may have chosen to throw away their cover.
But the pandemic appears to have had the opposite effect. The sight of crowded health care facilities and the prospect of long waiting lists in the public system seems to show people the value of having some level of health insurance coverage.
Tens of thousands have signed up, bringing the number of insured people back to 2008 levels, where they peaked before falling for the first time in decades at the start of the financial crisis.
That could change when the 2023 figures are published, but so far, broader inflation fears have had a relatively weak impact on the market.
Changes in the market
A major contributor to the growth we have seen in the past decade has been the community’s lifetime classification policy.
This is a system of equal pricing for all members and relies on younger people – who have fewer health care needs – signing up for insurance and essentially bearing the costs of older members who are likely to need to rely on their insurance more frequently.
In order to maintain this model, a loading mechanism was introduced in 2015 to penalize late entrants into the health insurance market.
“A 2% loading of gross premiums will apply to each year over age 34 that an individual has reached when first purchasing private inpatient health insurance,” the HIA explains on its website.
This policy appears to have achieved the desired effect.
People have signed up for the market at a younger age and are staying in, even if they sometimes opt for basic coverage either to start with or to cover periods with limited budgets.
The numbers choosing basic plans are small with Hamad International Airport figures showing that 93% of private health insurance holders benefit from so-called “advanced plans” with access to public and private hospitals.
This metric will be watched with interest as updated figures are published as a guide to whether consumers are reducing insurance cover to prioritize more urgent payments such as mortgages or other insurance products, the cost of which is also steadily increasing.
The road ahead
Dermot Judd believes further cost increases are likely in the coming months.
Premium increases have already been introduced in 2024 with Irish Life Health increasing the prices of most of its plans by an average of almost 5% on 1 January.
VHI and Laya also provided increases in a range of corporate plans at the start of the year.
“We always look at past trends. In early 2023, Irish Life came out on January 1. They’ve done it again,” Dermot Goode explained.
“The VHI index rose on March 1 last year. We have no notice, but we expect an increase from them in the coming weeks,” he added.
On the basis of Irish life increases and assuming they are all affected by the same cost factors, Mr Judd said increases of between 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 renewed their subscription by then, so it may not affect them renewing this year,” he added.
Beyond that, there’s little good news for consumers on the health insurance front.
Medical inflation has returned and claims costs have risen, both in terms of volume and quantity of claims.
The only thing keeping the market in check at the moment is the high percentage of the population that has health insurance policies.
If signs of decline appear in the coming years, especially among younger members, additional and steeper price increases cannot be ruled out for some time to come.