Bed charges to hit cost of health insurance

As private health insurers ring in the new year with a series of premium hikes, customers can expect further hardship in 2013 under government plans to charge insurers for private patients who use public hospital beds.

From today, Laya Healthcare, which has approximately 400,000 customers, will raise premiums across a number of schemes in a series of increases ranging from 4% to 13%.

Aviva Health, which has around 18% of the market, will increase the price of six plans today from 4%-30%. These prices will apply to all new and renewing customers. However Aviva is also set to reduce prices across three plans today.

Vhi Healthcare will increase the premiums of HealthSteps Gold and Silver today. The price hikes, flagged last year, are only the tip of the iceberg in terms of the increases likely under government plans to charge private health insurers the full cost of a public bed in a public hospital used by anyone with private insurance.

Up to now, insurers covered the bed cost where private patients were given private beds. Now, the Government is planning to charge insurers for anyone with private insurance who stays in a public bed.

Given the estimated cost per day of a hospital bed is €1,000, this will place substantial extra demand on private health insurers. The knock-on effect is that customers will have to pay higher premiums.

However fears that this could lead to premium hikes of up to 50% in 2013 were played down yesterday by Brian Turner, an expert in health economics and lecturer at University College Cork.

Dr Turner said Health Minister James Reilly had made it clear at his budget press conference that insurers would not be expected to meet the full cost of public beds overnight.

In December, Dr Reilly said the new charging system would be brought in on a “staged basis, otherwise the insurers couldn’t bear it”.

Mr Turner said bringing in the new system on a phased basis would have a less drastic effect in terms of the number of people canceling their policies.

“While there has been an 8% drop in the numbers with private health insurance since a peak of almost 2.3m in 2008, in fact, a lot of people have been downgrading cover rather than getting rid of it altogether.

“This trend is likely to continue if the new charges are introduced, although at some stage people will reach a limit on the amount of downgrading they can do.”

A spokeswoman for the Vhi said yesterday that “No pricing decisions have been made for 2013”.

There were 2.1m people with inpatient health insurance plans at the end of September. The numbers insured have fallen by 64,000 (2.9%) in the last 12 months. Based on CSO population estimates for Apr 2012, the percentage of the population with inpatient health insurance plans is 46.0% — down from the 2008 peak of 50.9%.