Despite an increasingly competitive market, the chance of snowbird travel insurance becoming less expensive in the short term is very slim. If you can find a deal you can live with now, buy it. Don’t look for bargains in December.
Snowbird premiums are generally based on estimates of where American hospital and outpatient service costs will be several months down the road. And despite President Obama’s claim that health reform will drive those costs down, they are rising relentlessly and even his own so-called experts seem to have no idea how high they will go.
What that means for you is that your insurer must “hedge” against those future increases and must also expect to find hospitals in the US unwilling to allow significant discounts, even to those insurers who can steer patient business to them. In the US, insurers and hospitals have a somewhat adversarial relationship: hospitals submit a list of “retail” charges that even they don’t expect to collect, and insurers negotiate discounts off those retail rates. But with health costs rising (as they are in Canada), and with average hospital operating margins razor-thin—and in many cases in negative territory—the discounts they used to give a few years ago are off the table.
So when you present a hospital emergency room with what you think may be a heart attack (even though it may only end up being a troublesome gall bladder or indigestion), your insurer may be faced with a bill for $20,000, $30,000, or maybe a lot more. There are a lot of tests that need to be done before you can be cleared for discharge. And if you are admitted to inpatient status, the costs will be much higher.
Fortunately, the strong Canadian dollar has mitigated some of that risk and insurers are no longer faced with the dilemma of collecting premiums in 70-US-cent dollars and paying them out to American hospitals in 100-cent greenbacks.
Is travel insurance too expensive? Compared to what? Travelling without insurance is an unacceptable risk for most people, so there is little option.
According to the Conference Board of Canada, since 1995, the average single-trip policy premium has risen by 41 per cent (up to 2008), to an average of $96.24. That’s for all age groups and for short-term as well as long-term trips, so it may not reflect your outlays at all. Given the average price increases of other goods and services over the past 15 years, that doesn’t sound out of line. But considering the direction of US health care costs in the immediate and long-term future, there seems little hope that travel insurance prices on average can moderate too much.
So when you see price breaks (such as early bird specials), or the introduction of preferred provider products, or deductible options, or annual multi-trip plans, look them over. There are still ways to cut your travel costs. So stay tuned and we’ll keep pointing out ways to keep your costs down without compromising your safety, while offering you opportunities to examine and buy plans online.