LAYA Healthcare is joining the health insurance price war with a new low-cost plan aimed at families.
The new €775-per-adult Laya plan is around 20pc cheaper than others in the market, but there are restrictions on the hospitals covered.
This move is a significant shot in the new price war first reported in June in the Irish Independent.
Insurers are desperate to stem the flow of families who are giving up private medical care in their thousands.
The new "no-frills" policies are an attempt to reverse the situation that has seen close to 200,000 of the under- 40s give up private health care in the last five years. Aviva has also launched its own low-priced plans, but with limited hospital cover.
VHI and GloHealth are now expected to follow Aviva and Laya with plans that are cheaper but have limited coverage in public and private hospitals.
Laya has already moved in, telling the health insurance regulator that it will offer the new Essential Value plan next month. The Cork-headquartered company will charge €775 for adults and €210 for children for the new plan.
Similar plans cost €1,000 a year for an adult. But the low price comes at a cost.
Cover in a semi-private room will only be provided in a limited number of public hospitals. There is also limited coverage of private hospitals.
For those who stay in the Beacon Hospital in Dublin, they will have to pay the first €175 for a claim.
There is a €1,800 co-payment for knee, hip and shoulder replacement surgery in selected private hospitals.
And Laya plans to launch an even cheaper policy on September 1. The Essential Value 500 costs just €665 per adult, which would make it one of the cheapest plans on the market.
The plan provides cover for a semi-private room in a public hospital, a semi-private room and day case cover in a private hospital, with a €500 excess per private hospital claim.
Health expert Dermot Goode, of Healthinsurancesavings.ie, said the new plans would suit those considering giving up health cover because they cannot afford the premiums.
VHI and GloHealth were also likely to launch similar no-frills policies, he said.
But he said the two new Laya plans were not good value for children. Families considering the new Laya Essential plans or the Aviva Focus plans should split their cover, putting children on other policies.
"These new Laya plans are good and bad. They are good value and will suit those considering pulling out of private healthcare, but they introduce more complexity," Mr Goode said.
People would need to work out which hospitals were covered before taking the policies, and would need to ensure that the hospital where they are to be treated was on the list, he said.
Charlie Weston, Irish Independent
HEALTH Minister James Reilly forced all the country's health insurers to hike charges following a request from the VHI and against the advice of the sector's watchdog, the Irish Independent can reveal.
The move resulted in an estimated 300,000 people on the cheaper health insurance policies paying more for their premiums.
Higher fees for basic insurance plans were introduced late last year, in response to concerns that health insurers would otherwise offer cheaper plans to young people while charging the elderly more.
But the Irish Independent can now reveal the decision was made following the VHI's request – in direct conflict with advice from the industry's regulator.
The rules, which were ultimately passed by Dr Reilly, came after recommendations contained in a confidential letter written by the State-owned VHI. The letter requested an increase to the cost of cheaper policies.
Before receiving the letter, the Department of Health had planned to reduce the levy. Dr Reilly had been advised to do so by the Health Insurance Authority, a statutory body appointed to guide him on health insurance matters.
In a report issued last year, the watchdog said basic policies should be made less expensive to avoid losing younger customers.
Young people have been cancelling their private health insurance in droves in response to spiralling costs.
The report warned that to "apply further increases at this stage could give rise to risks in the context of the sustainability of the market".
But the approach was abandoned by the Department of Health shortly after receipt of the VHI's letter last November.
In the letter, released under the Freedom of Information Act, Declan Moran – who was acting chief executive at VHI for part of 2012 – expressed concern that cheaper policies for younger and less risky people would allow market segmentation, meaning older policy holders would be charged higher premiums.
Dr Reilly changed tack in line with Mr Moran's proposals. The new rules he introduced earlier this year jacked up the cost of basic "non-advanced" policies to €290, only €70 cheaper than the rate charged to policies with much better coverage.
In a statement yesterday, the Department said the measures were "designed to result in no overall increase of premiums paid in the market, rather it is intended to spread the risk more evenly between the healthy and the less healthy, as well as the old and the young."
But Jim Dowdall, boss of new health insurer GloHealth, told the Irish Independent that the watchdog had been proved right – and the new rules had pushed more young people to cancel their health insurance, with the result that policies were now more expensive for everyone.
"We need young people to take out private health insurance so we can spread out risk and make policies more affordable for everyone" said Mr Dowdall.
"But affordability is the huge challenge for the market" he added. "Under-35s are falling out of health insurance faster than any other demographic. We have to be able to offer them cheaper policies."
The Department of Health also made cheaper policies less attractive in line with the VHI's request, by reducing the type of treatments they can cover.
Before Dr Reilly's recent reforms, "non-advanced" policies could cover the costs of day procedures like MRIs, colonoscopies and skin legions in private hospitals.
However the VHI was against this. "We believe this level of benefit is far too generous for categorisation as a non-advanced level of cover," Mr Moran said in his letter to the Department of Health.
Dr Reilly effectively followed this advice. His new rules mean that "non-advanced" policies only cover two-thirds of day procedures – the consumer must cover the rest.
Sarah McCabe, Irish Independent
THE Government is to continue to subsidise the cost of compensation payouts for private patients who are harmed by consultants in public hospitals.
The subsidies were introduced nearly a decade ago to keep the premiums affordable for consultants treating private patients in public hospitals.
Currently, the State pays a portion of medical negligence compensation when the payout goes above €500,000.
But this limit is now rising to €565,000, meaning the insurance company covering the doctor will cover this amount and the State will shell out for the rest of any compensation award.
Medical negligence compensation payouts for public patients are paid for in full by the State Claims Agency.
The deal, which sees the State subsidising compensation payouts for private patients treated in public hospitals, was worked out in 2005 after some consultants warned they might otherwise have to give up private practice.
The subsidy on compensation limits the cost of the insurance premium for the consultant.
The Department of Health's view is that the cover is needed to ensure the private system works properly and patients do not end up back in the public system. It does not include cover for work done in private hospitals.
The Government believes the subsidy is worthwhile as it makes the private system feasible.
Meanwhile, Health Minister Dr James Reilly got government approval this week to update the limits on professional indemnity cover needed by consultants "in private practice in private hospitals".
The cap on the cover will be adjusted annually in line with the Consumer Price Index.
The limit on indemnity cover, along with the creation of the Clinical Indemnity Scheme (CIS), formed part of the suite of measures put in place in response to a "crisis" in the commercial medical malprac tice indemnity market in 2001.
"The caps were necessary to minimise the impact of the Clinical Indemnity Scheme on the private healthcare sector," the government decision noted.
"The introduction of caps ensured that private consultants were not treated preferentially by the State in comparison to those in the private sector."
The new limits cover the following: obstetricians, neurosurgeons and certain ortho- paedic surgeons are capped at €565,000 per claim, subject to an annual aggregate limit of €1.7m per consultant; for all other specialities, the limit is €1.1m per claim, with no aggregate limit.
The previous limits were €500,000 and €1m.
Cover is provided by the state scheme for claims which exceed the limits.
Fionnan Sheahan, Irish Independent