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How to get better value in the health insurance market

By David Glennon | October 27, 2023

For the first time in several years, customers are facing substantial increases in health insurance costs at their next renewal.
Health and Benefits|Insurance Consulting and Technology

The last few years has seen health insurance prices stay relatively flat and indeed insurers have given rebates back to customers. The main driver of this was the drop in claims associated with the Covid-19 pandemic. Now that things are back to normal, we are seeing significant increases in hospitals claims. This alone would be enough to cause insurers to increase prices, but there has also been a dramatic increase in the costs associated with the delivery of healthcare due to upward pressure on wages, energy, and other costs.

What this means for customers is that for the first time in several years, they are facing substantial increases in health insurance costs at their next renewal.

Irish Life have announced 3 separate price hikes which in total have increased the prices of their plans by an average of 12%. They were followed by Vhi and Laya which have both had 2 price increases in 2023. Vhi plans have been increased by 11.8% on average, Laya’s average plan increase in 2023 is lower at 7.4%.

The key point to take note of here is “average”. Between them, the three providers offer over 340 different plans, and there can be significant differences between the headline average price increase and the actual price change for an individual plan. Some plans have not been impacted by the price hikes while we have seen the price of some plans increase by over 20%.

Every quarter, the Health Insurance Authority (HIA) publish a list of the 5 most popular plans for each of the insurers. We examined the data from quarter 1 2023, this will include the all-important 01 January renewal date.

All 5 of most popular Irish life plans have seen their price increase higher than the average Irish Life increase for 2023, for Vhi, 4 out of their most 5 popular plans will see increases above the average. While Laya plans have the lowest average price increase, two of their most popular plans, Simply Connect and Simply Connect Plus have had an increase of almost double the average plan increase.

Many of the plans in the above table are frequently chosen by companies as the primary plan for their employee health insurance benefit. Companies who are providing a health insurance benefit to their employees are going to see significant price increases at their next renewal. Employees will also be directly affected in terms of higher Benefit-in-Kind (BIK) taxation and increased costs for insuring family members.

When reviewing a health insurance plan, one of the most important considerations is how long these plans have been on the market. This can have a direct impact on both the cost of the plan and the strength of the benefits. If we examine just these 5 most popular plans from each of the three insurers, the ages of the plan range from 4 years old to14 years old. The average age of the five Vhi plans is 9.6 years, the five Irish Life plans have an average age of 6.2 years while the Laya plans are on average 6 years old. This is just an analysis of the most popular plans on the market but it is suggesting is that consumers are not reviewing their health insurance plan regularly or simply never switch plans.

Interestingly the 3 ’youngest’ plans, Vhi Public Plus Care Day to Day and Laya’s Inspire and Inspire Plus have had the lowest price increases in 2023.

People could be forgiven for thinking that insurers are simply taking advantage of consumers who don’t review their plans by applying above average increases to those plans. The reality is a little more complex. Older plans, particularly those with members who haven’t changed plans are more likely to have an older age profile. This membership profile is more likely to have more health issues which will have an obvious knock-on effect on claims which in turn means the insurers are forced to increase the price to cover the cost of these claims.

With insurers launching new plans every year, it is important that companies and individual consumers review their plans regularly.

Some of the more popular plans from the table above have almost identical plans from the same insurer at a much lower cost. It is also the case that the newer plans tend not to have quite the same price hikes as older plans as is clearly evident from the graph. Consumers can find it difficult to compare plans and to ensure that they are making the right decision. This can be a particular challenge for companies who have to make a decision for a diverse population of employees.

A significant number of companies providing health insurance to their employees have upcoming renewals in December or January, now is the time to take action and review your options.


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