The news that the number of people paying for private health insurance has fallen for the first time in more than six years could indicate an affordability “tipping point” has been reached, a leading analyst in the field suggests.
New figures from the Health Insurance Authority (HIA) point to a decrease of 1,663 people insured in the three months to the end of June, compared with the previous quarter.
While it represents a percentage decline of just 0.1 per cent, any sign of the market going into reverse is troubling, particularly when it is accompanied by a seemingly relentless series of price hikes from all the main providers.
“Health insurance continues to be important to almost half of the population,” HIA chief executive Brian Lee says.
“While the number of people with health insurance fell slightly during the quarter, it remains higher than a year ago,” he says, suggesting that the latest figures could indicate the market is entering a period of slower growth.
Dermot Goode of healthinsuranceieland.ie is more concerned, and suggests that if the latest figures do represent a slowdown it will be “a real concern” to individuals and to the broader market, as well as the health sector.
“The real concern now for the market is that we could be at a tipping point,” he says, pointing out that the fresh figures don’t include the “big increases coming everybody’s way from October”.
All told, half of the 2.5 million people currently with health insurance are set to renew their cover between December and the end of February, and virtually all of them will be facing price hikes of between 7 per cent and 15 per cent, with some outliers likely to be hit with price increases of close to 20 per cent early next year.
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One of the reasons why price increases of nearly 20 per cent have not made headlines is the manner in which the providers have started managing their announcements.
Rather than rolling out one increase a year, they have been drip-feeding the bad news to consumers over 12 months, with some of the price increases announced averaging 3 per cent or less.
Taken in isolation, consumers might consider them manageable.
But then their renewal date arrives, and all the announced increases kick in at once for individual policyholders.
Companies also focus their announcements on averages, but averages only tell part of the story.
Goode says the increases coming down the tracks could be “anything from 7 per cent up to maybe 15 per cent, and I have even seen some plans going up by as much as 18 or 19 per cent”.
“We’re already seeing older members reducing their benefits to keep their cover affordable, and I think there’s a real risk now that we might see younger people either postpone their joining decisions or those that have done everything they can to bring their premiums down forced to start exiting the market.”
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We have been here before.
In the wake of the economic crash in 2008, the number of people who could afford private cover between 2011 and 2015 fell.
The danger is not just for individuals. A decline in the number of people paying for health insurance hits the sector hard and could see prices climb even higher, forcing more people to relinquish their cover and putting more pressure on the public health sector.
“There is that risk at the moment. It’s only a risk and hopefully won’t be a reality, but there is a risk that the market has reached that tipping point and therefore it could start to contract, and that’s not in anybody’s interest,” says Goode.
