What's the story with health insurance?Nearly half a million people with health insurance from Bupa have been brought on something of a rollercoaster ride in recent months.
After the company announced last December that it had decided to leave the market because, it claimed, it couldn't turn a profit due to the High Court's decision to uphold the principles of risk equalisation, its policy-holders looked set to be the real losers.
With just the VHI and Vivas left, it was estimated that premiums for more than two million people would rise significantly and quickly. At the end of January Bupa's 475,000 customers got some surprising good news when they were told to expect price freezes and not price hikes following the announcement by the Quinn Group that not only was Bupa's business viable, it was worth buying for over €100 million.
THE THREE-YEAR DEROGATIONthe new owner claims it has from making risk equalisation payments allowed it to halt insurance premium price increases which would normally have kicked in at the beginning of March.
Its price freeze will inevitably put pressure on the other companies to stall any planned price hikes of their own, although with the VHI's expected risk equalisation payments disappearing, it is likely to find itself under intense financial pressure in the coming months and is unlikely to be able to offer similar deals.
Then, just as Bupa's customers were coming to terms with their unexpected good fortune, the Competition Authority came along and spoiled the party. Unless the health insurance system in Ireland is radically restructured, it warned in a report published last week, the cost of health insurance will rise dramatically here. "The average price of health insurance will increase regardless of the level of competition in the market," it said.
People still needed to shop around for the best deals, the Competition Authority said, and, in its report, it called on the Health Insurance Authority (HIA) to play a bigger role in advising customers on how to do just that. And consumers really do need help, because trying to find the best deals is not easy.
It is next to impossible to make like-for-like comparisons on the various options each insurer offers, and even the professionals struggle on occasion. When PriceWatchrecently asked a VHI customer service representative for advice on choosing a plan comparable to Bupa's HealthManager Plus, the answer could most kindly be described as muddled.
The HIA accepts that more needs to be done to keep consumers informed, and a spokesman told PriceWatch last week that the regulatory authority plans to treble its marketing spend to more than €250,000 this year. It also offers topline details of the costs and the main benefits provided by health insurance products in a fairly simple and thankfully brief format on its website, www.hia.ie.
According to HIA figures, Bupa remains significantly cheaper than VHI for most policies, although Vivas does offer even better value on some. The most basic Bupa package costs €27.61 per month, while the cheapest package on offer from VHI is €35.24. Vivas, meanwhile, offers an entry-level insurance at a cost of just €25.54. Bupa's Health Manager Starter is €41.91, with the VHI equivalent costing €53.50; Vivas's similar policy is €41.92.
The fact that Bupa trumps its main rival on almost all policies may explain why it is very confident the 50,000 customers whose policies expired at midnight on January 31st and who prior to this, it had repeatedly told to go elsewhere for health insurance will now choose to stay with the company.
It does of course help that Bupa was able to make the choice for all of them. By sealing the takeover deal ahead of the midnight deadline, Quinn was able to hang on to these 50,000 customers.
AT THE BEGINNINGof this month Bupa wrote to the 50,000 customers telling them to ignore all previous correspondence. The letter explained in a jaunty tone that their policies were still in place and it pointed out to those who had switched to an alternate provider that they had 14 days from the beginning of February to cancel the new arrangement at no cost, save for the time and effort that had been put into arranging the alternate insurance.
So, despite the fact that Bupa had said to these customers that their policies would not be renewed and advised them to take their business elsewhere, it then was able to reverse its position entirely.
There now exists the real possibility that many of the 50,000 find themselves paying two health insurance premiums in February. And two policies are about as useful as a teapot made of cheese.
Both the HIA and Bupa have said they are aware that the possibility of people receiving bills from both Bupa and VHI exists as a result of the last-minute takeover. Bupa says, however, that it has had no indication that this has happened so far, and is confident that its members have come back to them "in their droves".
"We have made sure our customers have been fully informed of their consumer rights, in this regard," a Bupa spokesman said. He added that if consumers did find that at the end of this month they had been billed for premiums by both Bupa and an alternate insurer, Bupa would be "very fair and very flexible in its approach".
