Competition in the Irish Private Health Insurance Market

• Work-based group schemes where employers deduct health
insurance premia for employees directly from their salaries are a
major feature of private health insurance in Ireland. Vhi Healthcare
traditionally gave a discount for members who joined as part of a
group scheme and this discount was 10% when the Health
Insurance Act was passed in 1994. This 10% group scheme
discount was incorporated into the legislation as the maximum
discount that could be offered on an adult health insurance
premium.
• Of those PHI subscribers who avail of their health insurance
through work based group schemes, approximately one-quarter
benefit from the employer paying all or part of the health insurance
policy premium.
• In recent years, almost all new PHI subscribers get the 10% group
scheme discount. For instance all three insurers offer the 10%
discount to members who join on-line through their website. As
such, the group scheme price has effectively become the market
price.
Private Health Insurance Prices
2.57 When BUPA Ireland entered the market, it priced its policies about
10% lower than comparable Vhi Healthcare prices. Since entering the
market, BUPA Ireland’s cumulative price increases have been very
close to Vhi Healthcare’s, thereby maintaining this 10% price
differential. The price differential has tended to widen to more than
20% for six months of the year because Vhi Healthcare usually
increases its prices in September whereas BUPA Ireland usually does
so in March.
2.58 Between September 1997 and March 2002 annual price increases were
around 9% per annum with the exception of the premium increase of
6.5% in 2000/2001. BUPA Ireland’s increases were similar in
magnitude to those of Vhi Healthcare.
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