Redesigning health insurance policies to make them comparable and promote competition

Brendan Burgess

Brendan Burgess

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I set out yesterday morning to review my health insurance and have found the process bewildering as I do every year.
I have suggested new format for questions on askaboutmoney to help identify good value policies

But I have since thought that we should tell the health insurers to redesign their products to make them comparable.

Each company would have a standard package for adults

Standard package
Overnight stays without an excess in a semi-private room in a private hospitals excluding the Beacon, Mater Private and Blackrock Clinic (BMB)
All day case/surgical procedures without an excess in all private hospitals excluding BMB.
Price: €2,500

(Note - this is just an example - I am not being prescriptive about what should be in the basic package and what it should cost)

Add the following
Private room+ €400
Beacon+ €200
Mater Private and Blackrock Clinic+ €400
Consultants Fees - anything over €300 a year+ €300
GP fees - Anything over €200 per year+ €200

You can reduce your premium as follows:
Pay 20% of Orthopaedic and ophthalmic procedures- €200
Pay the first €150 of any day case yourself- €100
Pay the first €600 of any hospital stay yourself- € 500

So rather than trying to compare the VHI Progressive Regressive Future Plan A with the Laya Super Duper Precision 300, I could just input my requirements into the HIA website and get a quote for each.

If it's too expensive, then I could increase or reduce the cover.
 
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Something similar operates with car insurance

Third Party Fire and Theft is the basic product
I add Comprehensive if I want it
I can reduce my premium if I opt for a bigger excess
I can pay for windscreen cover

With house insurance
I get a discount for having an alarm
I get charged extra or have cover excluded for living in a flood risk area.
 
Brendan, sorry to be negative, and I would love for something like this to work for all of us, but I don't think the health insurers would entertain it at all, and I can't quite figure out how it would incorporate the big issue of Risk Equalisation.

Risk equalisation​

The costs for insurers are different depending on the age and health profile of their members. The HIA tries to balance out these differences in insurers' costs through the Risk Equalisation Scheme.

Under the Risk Equalisation Scheme, the HIA pays health credits to insurers to compensate them for the higher costs of insuring members over 65 and members who make more health insurance claims.

Each insurer pays an annual levy on each policy to help fund the health credits.
 
You are quite right, health insurers would not like it. But that doesn't mean we shouldn't campaign on behalf of consumers to get it done.

It would take a long campaign and it's a pity that there isn't any TD who is focussed on consumer issues.

But if we can get the proposal right, then we can kick off a campaign.
 
Contacting the HIA, asking them to redesign their website, to better serve the needs of the public, might be the first step. A lot of individual communications / complaints, from members of the (AAM) public, would have to draw a response.

Perhaps some of the journalists would help get the concept some publicity ?

Publically calling on the Minister for Health, might also be an interesting approach....
 
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Brendan Burgess said:
Risk equalisation is in the background.

I don't see how it impacts my proposal at all?
Click to expand...
Perhaps you're right and it wouldn't have any effect but my initial reaction was that it would. Reading back over how the Risk Equalisation works, now makes me wonder. Ya have me head wrecked :D
 
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I want to revisit this spurred on by EastMeath's comparison tool.

The Australians classify their policies as Bronze, Silver and Gold.


Here is how Canva prices its products. Could something similar be done for health insurance?

1775735328775.webp


Is there some checklist of things which could be covered by a life policy.

Basic includes a private specialist, a private room in a public hospital, Excluded: Private hospitals, day to day expenses
Private hospital plan: Everything in Basic + access to most private hospitals: Excluded: Beacon, Mater Private and Blackrock
Hi tech plan : Everything in Private Hospital Plan + Beacon, Mater Private & Blackrock

Optional extras which can be added to any plan: Day to Day Expenses

Excesses and copayments which can be used to reduce the cost:
 
Some plans have over 60 different benefits listed, many of which are irrelevant or confusing. Many of the entries are meaningless without context, and the insurers make little or no effort to explain them. The most generous interpretation of this is ineptitude, but the most likely reason is that they try to bamboozle people.

How many people are walking in to Toyota and asking for the full specs of a Yaris then making a decision based on the minutiae on page 7? People care about the headline items: price, MPG, manual/automatic, etc.

When we make any purchasing decision, we should ask the high-yield discriminating questions first, so that we narrow the selections early.

It sounds like what you are suggesting Brendan is that the HIA (if they have the power) would need to lay out minimum criteria for each category and then the companies can add on whatever extras. Does car insurance already work that way with specific definitions of comprehensive, 3rd party fire and theft, etc. or was that an industry/voluntary thing?
 
When reading any of the plans using the comparison sites, the amount of detail is huge but the "high yield discriminating questions" don't get high priority.

I like the idea of core elements and then extras.

As you say, I want to know the mpg and price and transmission type. If I want AC, that would be extra. Or if I go for a 2 door instead of a 4 door, that would be cheaper.

I don't think that there are specific definitions. Third Party is the only mandatory insurance. And that is liability to anyone I crash into. The causes of fire and theft would be set out in the policy and I would imagine that they would be standard. They probably exclude theft if you have left the keys in the car or are otherwise careless.
 
arbitron said:
if they have the power
Click to expand...

Of late I have begun to wonder exactly how much power they have.

Allowing Laya to drop the ophth and ortho cover in one go from 100% to 60% is disgraceful and nothing is being done about it. There was one policy in particular that they actively recruited people since late last year to switch to and approx 6 months later they make this big change at renewals. I feel that it was also elderly people that they did this to so most likely not to do something about it because their fear of changing policy often. .
 
arbitron said:
we should ask the high-yield discriminating questions first,
Click to expand...

So what are the high-yield discriminating questions when it comes to Health Insurance?

If I need an elective procedure, can I get it done privately? Presumably that is the main purpose of health insurance.

What procedures are covered and what procedures are excluded?

Is maternity covered?

Are private hospitals covered?
 
It would be very useful for the insurers to have a common format for their plans with the same layout and terminology. At the moment the insurers can put in whatever they want as a benefit (e.g. I saw one with Child sports club membership) and make it look like a super-duper plan. I saw a plan that says it covers genetic testing - but on te same list it specifically names certain types of genetic testing that it covers, so I can't tell if that's a duplicate or there are exceptions, or what they mean.

Brendan Burgess said:
So what are the high-yield discriminating questions when it comes to Health Insurance?
Click to expand...

Anything where there are yes/no questions with big differences.

If 95% of plans offer maternity cover, then that isn't a very helpful question to ask at the beginning because it only removes a small number of plans.

But if say 50% of plans do not cover Beacon Hospital, then I am not interested in those plans at all. Immediately that narrows it down.

Plan price is probably the biggest discriminator for many people? Everyday expenses would probably be high up there also.

@eastmeath might be able to tell us what the big differentiators between plans are based on their database?

Brendan Burgess said:
What procedures are covered and what procedures are excluded?
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This is important, I have no idea what they mean by "Specified Orthopaedic Procedures" so the PHI brochure telling me I have cover in that category for "60% semi-private rate accommodation; 60% technical charges" is meaningless. I think it's bad practice on the part of the insurers. A comparison tool getting me to rank that is not useful as it's not an informed decision.
 
lot of it is personal and stage of life relevant. The big differentiators are copays, excess and then obviously % cover public/private/hitech for the different hospital beds - but then they are the only ones that are very easy to compare. "Hitech" in medplan is just blackrock and mater now - the hi-tech score is now reduced to zero if the hospital list is qualified e.g. beacon only.
lots of the “benefits” are just not insurable risks. they are pre-paid lifestyle expenses imo and have no place in an insurance product - medplan gives it all a zero weighting. Real risk is having to pay 40% on an orthopaedic procedure
Everyday medical expenses do have value but easy to overstate, again probably personal, some people never go to a gp. but they are not really insurable risks either, not much more than a refund of premium. Very hard to compare day-2-day between plans too. Some plans have a max claim of 1 GP visit p.a. It is ridiculous.
 
eastmeath said:
lots of the “benefits” are just not insurable risks. they are pre-paid lifestyle expenses imo and have no place in an insurance product - medplan gives it all a zero weighting. Real risk is having to pay 40% on an orthopaedic procedure
Click to expand...

I have been banging on about this for ages. We should not insure against expected expenditure such as doctor's visits.
 
Some issues I recall.

  • Some plans cover 50% of a procedure, other up to €500. Which is better? Could there be a standard way to represent.
  • Private hospital access is the most important. However it seems to be tied in with private rooms which is on the bottom of my list of important.
  • I think there may be issues if you have semi private room in a private hospital coverage and are in a hospital that only has private rooms.
  • Understanding what hi tech I want is difficult especially if most are in Dublin and I am not. I would travel for best care obv. but is it needed?
  • It is possible to pay to go private for some procedures. When you have to pay for speed and access its straightforward but when you can pay to go private for say a knee replacement its a bit more of a risk calculation. If a knee replacement costs €15k privately and orthopaedics cost €300 per year to include, I am say 30, so I will pay €9k to include it for the next 30 years but the chance of me needing a replacement before 60 is only 10%, thats not good value is it, I should have put the money in an emergency fund. Maybe it makes scene to add it in at 50?
There are two ways I think it could go. A limited number of plans as above, A to D with mandated requirements in each for all providers.

Or require a pick and mix build your own plan, Allianz car insurance is a bit like that for extras, you can see what each one costs and decide to add a no claims protection, contents insurance, breakdown, windscreen etc.
 
I would start by getting the insurance companies to consolidate their plans. The VHI has (I believe) over 80 different plans. A limit of 9 or 12 plans per provider should be the maximum allowed. This allows High, Mid, Low coverage, multiple levels of add ons.
 
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