Why is my health insurance so expensive... and do I really need it? 

So what — or who — is to blame for this “perfect storm”? A sharp rise in the number of claims, a reduction in the number of premiums on offer, higher costs for private hospitals which are being passed on to consumers, and an aging population, are some of the main reasons.

Since the end of the pandemic, more people are accessing treatments, which means more people are making insurance claims.

In its Health Insurance in Ireland Market Report 2023, the industry’s watchdog the Health Insurance Authority (HIA) reported a 15% increase in claims compared to 2022.

Mr Goode, of the Lockton Insurance Brokers-owned Total Health Cover, said: “After covid, everybody’s going back into hospitals now to get treatments done that were postponed because of the pandemic.

“People going back in to get all those hips and knees and shoulder replacements and cataracts.

“But at the same time, the cost of those treatments now are much, much higher than they were previously.

If you talk to any private hospital, they will tell you, in the last two years, the cost of electricity, the cost of every utility that goes in, has gone through the roof.

“Then they look at the wage agreements and the cost now of hiring new consultants, and the higher costs of new drugs.

“Anything that could cause upwards pressure on premiums has actually happened and there’s a perfect storm happening right now in health insurance, it’s on the radar, and it’s coming our way.”

Added to that, while health insurers have been introducing new plans, a number of plans have also been — or are due to be — retired.

“As well as spiraling rates, and costs, you also have a lot of private health plans being retired,” said Goode, who is a healthcare insurance expert with more than 35 years of experience.

“So there are going to be thousands and thousands of people out there who, each year, up until now, have just rolled over on the same plan, and they can’t do it anymore.

“They are going to have to shop around and engage at a time when, in a number of cases, benefits are being reduced despite the increase in premiums.

“So everything that could happen negatively for consumers of health insurance is happening.”

This means thousands of consumers who may have stuck on the same plan for years are now going to have to find a new one.

But given that there are 348 plans on the market currently, choosing the right one is no easy feat.

According to the HIA, only 26% of private health policy holders have ever switched policy and the average length someone stays with the same insurer is 15 years.

“This means that particularly older people would be potentially paying for more expensive policies due to not having shopped around or checked if the policy still meets their needs,” a HIA spokesperson told the Irish Examiner.

That could go some way to explain why, in April, the HIA noted in its 2023 market report that over-65s paid 43% more for private health insurance last year than they did in 2022.

Some 50% of people with health insurance are on one of 30 plans. Therefore, the choice between plans is concentrated even though there are 348 plans in the market.

“While having a variety of plans available allows consumers to choose the best plan to meet their needs, having so many plans can make it difficult for consumers to choose.

“The HIA research shows that 41% are paying more than they may potentially need to and this may be (because) they have never switched policy.”

And even if consumers manage to switch to save money, higher premiums are almost unavoidable — given the scale and number of price hikes by the industry’s three biggest providers.

Laya and Vhi premiums are increasing next month, following Irish Life rises earlier this year.

Laya customers will, from October 1, see an average increase to their premiums of 6.5%, while Vhi customers will see an average rise of 3.5%.

In May, the HIA put the average adult premium at €1,685, which will be significantly higher at the end of the year when all the price rises come into affect.

May’s figure reflected a rise of almost 13% on the first quarter of 2023 — a year in which average adult premiums rose by 10% to €1,594.

In fact, last year’s hikes were so significant, it prompted the HIA to warn that rising premiums, as well as the cost-of-living crisis, was resulting in fewer people buying private health insurance.

Why the hikes?

The insurance companies are all quick to cite the same reasons for increased premiums.

For its part, Vhi points out that while some premiums are going up, there will be a 25% price reduction for children on selected plans to “help mitigate rising costs for families”.

In addition, day-to-day benefits have been added to some plans.

The company said the rises are in response to “the sustained increase in both the volume and costs of healthcare claims”.

In the first half of 2024, for example, Vhi said private hospital claim costs were up 14% compared to last year.

The cost of day-to-day claims have also increased “significantly”.

They also said healthcare costs are rising as more people are accessing healthcare.

Laya healthcare managing director Dónal Clancy said that while advances in modern healthcare, including new technologies and high-cost drugs are delivering better outcomes for people, they are “significantly driving costs up”, particularly in private and hi-tech hospitals.

While lower than Vhi, Laya’s private hospital claim costs were up 11% this year compared to last year.

Laya also say the increase is being driven in particular by a rise in cardiology and cancer claims, where there has been a 29% increase in claim costs compared to 2023.

When in May, Irish Life Health announced its fourth premium increase in 18 months, it blamed the ongoing increasing demand for healthcare across both public and private hospitals.

Irish Life Health managing director Ger Davis said the health insurance market is going through what he called “a correction” as private hospitals are rapidly working their way through the backlog of procedures from the pandemic.

At the time, the insurer said it has seen a 14% increase year to date in the value of private hospital claims compared to last year.

The issue around long waiting lists — arguably the main reason people take out private health insurance — raised its head recently, with news the HSE was to slash its reimbursement rates for cataract operations carried out in the North.

The changes affect a scheme where people on waiting lists can get their eyes — or other things such as hips — done in the north, and which obliges the HSE to pay towards the cost.

From September 1, however, the amount it will pay towards certain cataract operations has been slashed.

The reduction in reimbursement rates will see people — mostly pensioners — having to find more money to get their eyes done in the North if they don’t want to wait to get treated by the HSE.

It is just a matter of time before National Treatment Purchase Fund stats are expected to show the impact this will have on ophthalmology waiting lists which already have more than 40,000 people waiting for either assessments of or treatment done on their eyes.

Centre for Health Policy and Management director at Trinity College Dublin’s Public Health and Primary Care in the School of Medicine, Sara Burke believes people will continue to pay private health insurance as long as long waiting lists persist.

But she doesn’t believe private health insurance, as a whole, gives good value for money.

This is, she said, especially the case when you consider that in 2021, for example, private health insurance only accounted for around 12% of total health expenditure in Ireland.

This is according to the 2023 State of Health in the EU report by the Organisation for Economic Co-operation and Development (OECD).

Ms Burke said: “It does get you fast access if you need a procedure quickly.

“In that sense, it is individually good value for money, if your health insurance covers that procedure.

“But private health insurance doesn’t cover the vast majority of care.

It doesn’t cover you if you have a massive brain injury or stroke or you’re in a road traffic accident, you won’t be looked after in a private hospital.

“You’ve got to walk into a private hospital with deep pockets.

“But if you’re really sick, if you have a chronic, debilitating condition, if you have a neurological condition, if you have dementia, I would argue, if you’ve an awful lot of things, you’re much better off in the public system.

“What the private system does is it does a lot of cheaper, more profitable care — the hips, the knees, the cataracts, the scans.

“A lot of the expensive, slower, harder to do care remains within the public system.”

Ms Burke, whose work on the Oireachtas Committee on the Future of Healthcare in 2016 and 2017 produced the Sláintecare report, added:

“I would argue that our health insurance system is very bad value for money, because it doesn’t finance most care.”

Dermot Goode’s private health insurance “perfect storm” is all happening just before what is regarded as the peak insurance renewal period, from the beginning of November through to the end of February.

“This is when half the entire market for insurance renews,” he said.

“The premium increases and the retirement of plans are coming, so it just means switching activity is going to absolutely increase hugely.

“The key thing is that people need to pick up their phone, call the insurance company and tell them what their budget, is and challenge them to recommend a cover that fits that budget.”