The Insurance Ireland Health Insurance Council, which includes the State’s four main insurers, today rejected statements made by Health Minister James Reilly on RTE’s Week in Politics (16.6.2013) that health insurers are engaged in public scaremongering and that a failure by insurers to curb their costs is the reason why a record number of people are leaving Ireland’s private medical insurance (PMI) market. 

Michael Horan, spokesperson for the Insurance Ireland Health Insurance Council, said: “Our market impact analysis has been researched and the calculation that the implementation of public bed charges will lead to a 30% increase in health premiums has been ratified by industry experts. It’s not in the interests of our customers or our industry to scaremonger. But the inescapable fact is if the Government presses ahead with its plan to implement these charges it will exacerbate the current price spiral and risk destabilising our system of community-rated health insurance.”

The Insurance Ireland Health Insurance Council took issue with several other comments by Minister Reilly:

The Minister said the insurance industry should do more to curb the increase in claims costs. Claims costs have increased because a record number of younger, healthier people are dropping out of the market, leaving a larger cohort of older, sicker people who tend to claim more. This puts upward pressure on premiums, as insurers are forced to pass on the higher cost of claims in order to balance their books. As Colm McCarthy pointed out in his recently published Report on the Health Insurance Market: “Once a concerted shift in the age-distribution of members away from the younger age-groups becomes established, rising average premiums can make a community-rated system dynamically unstable.”

The Minister warned health insurers to cut their costs. All four insurers have invested in and rolled out significant cost saving initiatives with a wide range of clinical reviews & claim audits already in place. Costs are reviewed on an ongoing basis with all private hospitals and rate reductions have been achieved in recent years along with significant reductions in the fees paid to private consultants. However, the Minister does not facilitate negotiation of costs with the public hospitals and instead of a reduction in costs there has been an increase of over 60% in the rates charged to private health insurers for public hospital services in recent years. In a submission to Government, the Health Insurance Council suggested that the Government explore efficiencies in the public health system rather than increasing costs to insurers. A move to best practice for public hospital contracts could yield savings of 10%, representing a potential saving of €40-50million per annum.

The Minister suggested that insurers push for costs to be billed by procedure, rather than by length of stay. This already occurs in private hospitals and it drives greater efficiencies in the private sector. For some time now health insurance companies have requested this approach be taken within public hospitals but this has not been accepted by the Department of Health. Instead, daily charges in the public system are set by the Department and insurers cannot negotiate with public hospitals in the same way they do with private hospitals. As a result, in the last four years costs in the private sector have been significantly reduced compared to a 60% increase in public sector costs.

The Insurance Ireland Health Insurance Council submitted a detailed market impact analysis to Government one month ago. The report set out several alternative solutions that addressed the Government’s exchequer funding issue without jeopardising the health of the market and forcing a mass exodus of private health insurance members. These solutions could include the implementation of an Advance Claims Settlement Payment for 2013, 2014 and 2015. This would result in significant payments being made to public hospitals while offering the opportunity for health insurers to work with the Department of Health to implement a number of sustainable cost-reduction and market stabilisation initiatives.

“We have presented our case in detail. To date the Minister has not responded to that submission. We now wait on the Minister to respond to our recommendations and we welcome the opportunity to work together to find a solution that will not penalise over 2 million health insurance members – rather, it will help to restore confidence to our corporate and personal customers”, said Mr Horan.

Insurance Ireland – the leading voice of insurance