2015 was a year when the Government undertook not to interfere with the levers of which they have control, which may have led to inflationary pressures on the cost of Private Health Insurance.
These levers are:
- Public Hospital bed charges
- Health Insurance Levies
- Tax Relief
By not increasing these levers, we have been allowed 12 months to see if indeed the claim made my insurers that Government were the cause of double digit price increases. So what are the results?
While we are awaiting official figures from The Health Insurance Authority (www.hia.ie) the early indications are that 2015 is likely to record the lowest average increase in the market across all insurers since 2010.
I have said for a long time that the State has used the Health Insurance Sector as a cash cow and bled it for as long as it could while barely keeping it alive until finally giving it a transfusion in April 2015.
By bleeding it dry I refer to the manner in which those who chose to pay for Private Health Insurance were regularly forced to pay more and more for their cover by virtue of the State forcing insurers to pay higher and higher costs for Public Hospital Beds (something which insurers cannot negotiate on), increased Health Insurance Levies (which increased by 150% since 2009) and a capping of tax relief which effected 96% of the insured population.
By giving it a transfusion, I refer to the welcome news of ‘Lifetime Community Rating’ which saw a further €88,000 people enter the market as a direct result. Indeed the market figures now record that the amount of people with Private Health Insurance (2,110,000 as of June 2015) now represents 92% of the highest number ever recorded in 2008. Given that the new community rating legislation is likely to ensure quicker entry into the market from those with an interest, we may recover to these numbers by the end of the decade. Anything sooner would be considered incredibly successful.
Lifetime Community Rating
The measure in effect penalises those late entrants to the market who choose wait until aged 35 or older. Once 35, the customer will be subject to a 2% loading on the standard premium. This came into effect from April 1st 2015 and from that date on a loading of 2% will apply those aged 35 and a further 2% for every year older than 35 one is at the time of taking out health insurance for the first time i.e. A 47 year old will have a loading of 26% on the standard premium.
Other changes that took place were the standardisation of waiting periods under the Open Enrolment Regulation, the standardisation of waiting periods and the redefining of Pre Existing Conditions.
Open Enrolment Regulations
New open enrolment regulations resulted in reducing upgrade waiting periods and pre existing condition waiting periods for older people by standardising the level for all ages. While shorter waiting periods can apply based on age, the maximum waiting period for claims are now the same irrespective of age i.e.
• Nil for claims from accidents and injury,
• 26 weeks for illnesses that commence after a person purchases insurance,
• 52 weeks for maternity related claims,
• 5 years for claims from pre-existing conditions when the person first purchases insurance and,
• 2 years for upgrades in cover,
Redefining of Pre Existing Conditions
The definition of a pre-existing condition is now an ailment, illness or condition where the signs or symptoms existed at any time in the period of 6 months prior to the insurance commencing. In other words, if you were symptom free in the six months prior to taking out cover, it will be deemed a new condition rather than a pre existing one.
Extension of Newborn Waivers to Adopted Children
The immediate rights to full cover for infants from their date of birth provided they are added to a policy within 13 weeks of their date of birth will be extended to adopted children added within 13 weeks of their date of adoption.
So what next....?
In 2016 we expect to see increases from all insurers yet again but not of the measure of 2014 and before. Aviva have already announced price increases for January and I would expect some price adjustments again from them in March although I expect the impact to be mostly positive.
GloHealth have already made a very strong showing in the New Year with a legion of new plans striking a mark across a whole range of price points and we are set to see some new additions to the corporate suite for March also.
Laya Healthcare have also announced increases for the month of March which are expected to me in the region of 3.3% average on the gross premium across their consumer plan range and 5.4% average across their Corporate Suite of plans.
We could see Vhi go back to their traditional date or March for premium changes. It is hard to predict whether they will see an increase at all or whether they will hold premiums as they are for as long as they can with a view to increasing market share now that solvency and regulatory issues are a thing of the past, or whether the cost of compliance an reinsurance will soon start to show in premiums.
However the big news has to be the rumours about a potential merger and acquisition in the offing for 2016, but that story requires a separate blog....
Irish Health Insurance