CAN A TIGHTER HEALTH INSURANCE MARKET DELIVER PRODUCT AND PRICE?
You’ve probably heard or seen the radio and television ads for the newest health insurer in the market – Irish Life Health, which has been created from the merger of Aviva Health and GloHealth.
Together they now insure 425,000 individual and corporate customers; the VHI remains the biggest, with c1.1million members and Laya Healthcare with 550,000.
The new company’s managing director, Jim Dowdall, the former CEO of both the merged companies (at different times), insists the merger will enhance, not restrict competition, despite reducing the number of players in the market to just three. It certainly convinced the Competition and Consumer Protection Commission that this would be the case though it’s hard to imagine the CCPC or the EU ever tolerating just three motor or home insurers.
Nevertheless, the arrival of Vivas back in 2004 certainly forced VHI and BUPA (which preceded QuinnHealth and Laya) to raise their games as they scrambled to match the new types of plans, benefits and innovation that Vivas introduced – especially for the lucrative and demanding corporate market. Dowdall stepped up that pressure when Aviva Insurance took over Vivas a few years later, and he remained as the MD of the new Aviva Health operation.
In 2012, having left Aviva, Dowdall set up the fourth and smallest of the health insurance providers, GloHealth. It moved even further in offering innovative, focused plans that suited both individual healthcare needs and budgets.
Active sports players who joined GloHealth for example, could opt for more sports injury coverage than was offered by more standard policies. Families could load up on out-patient cover and benefits more suitable to their needs while older people could pick and choose higher value treatment cover or accommodation packages. Both GloHealth and Aviva were also at the forefront of ways to access diagnostic consultations with nurses and GPs by phone or on-line.
“This is a market where scale is particularly important,” Jim Dowdall explains. He diplomatically describes it as “unusual”, “highly politicised”, and with state operating rules that “keep changing”, referring to the health insurance levy that can account for 65% of the price of lower value entry plans, and the hospital bed charge of over €800 a night for insured patients, “even if they end up on a trolley or recliner”.
He concedes that this is probably why there haven’t been more Irish or foreign operators here since BUPA first arrived to challenge the VHI’s monopoly in 1996.
But he also warns that health-care costs are likely to keep going up for as long as there are “non-negotiable charges” imposed by the state.
“The population is ageing. We may think the cost of health care is high today. But wait and see how expensive it becomes in the future, with better medical outcomes and diagnosis. More cancer and heart cases will be treated and will put higher demands on the public system. But that’s why it’s even more important to tackle the artificial drivers of our health insurance cost increases.”
The government, he said, needs to recognise that people with insurance are “alleviating the pressure on the public system and should be rewarded for this, not discriminated against.” Last year alone he says the HSE collected €150m from the public hospital bed charge. With the levy, this is driving up the cost of insurance and preventing people from buying levels of cover that will keep them from accessing private hospital service.
He also believes that innovations like the GP video consultations that Irish Life Health customers now enjoy is a way to take pressure off the public system, and deliver value to customers.
“For example, a parent who opts for it doesn’t have to take time off work to physically bring a sick child to the doctor. A prescription can be issued to your local pharmacist. And you don’t have to pay the €50 or €60 charge. We pay the GP directly.” He promises more of these kind of the community based, primary care services.
I asked the specialist health insurance broker Dermot Goode of TotalHealthCare.ie what he thought of the merger:
“I think more competition, more players would be better. But Irish Life Health is going to shake up the corporate market, no question. They will leverage the Irish Life brand and its existing corporate life and pensions business.
“And that isn’t a bad thing for the individual consumer because under our Community Rating system, everyone has access to every plan on the market, including the corporate ones. I expect there will be some very good new plans coming out at very competitive prices.”
Finally, a welcome concession to bewildered health insurance customers everywhere: Dowdall also promises that Irishlifehealth.ie will streamline their product selection to make it simpler to comparison shop. “There really has been too much product out there”.
VHI and Laya, please take note.