Over 200,000 on verge of quitting their health cover
Published 18/07/2014 | 02:30
A LEADING insurer has warned that thousands of people will give up health insurance if the Government imposes more "penalties" on policies.
Laya Healthcare told new Health Minister Leo Varadkar and Finance Minister Michael Noonan that another 210,000 people will ditch their cover unless the State stops imposing extra charges and costs on the market.
The Cork-headquartered company is the second largest health insurer in the country, with close to 500,000 members.
But it said the sector was reaching crisis point.
Around 7,000 people a month were dropping out of the health insurance market, Laya said.
Already close to 300,000 people have opted out of paying health insurance since the downturn in 2008, Laya boss, Donal Clancy, said.
There are around two million people with private medical insurance. If another 200,000 drop their policies it will mean 500,000 will have opted out of the market.
He said the Government's decisions last year to restrict the amount of tax relief each person gets on a health insurance premium and the move to hike the levy on each policy were huge factors behind the high cost of premiums.
The levy is used to ensure that everyone, no matter what their age and state of their health, pays the same price for the same level of cover.
A levy of €399 is imposed on each adult policy, with the funds then used to compensate companies with the most older members. The VHI is the big beneficiary of levies, which have gone up from €160 per adult in the last five years.
In the last Budget, the tax relief on health premiums was restricted to €1,000 per policy. This mean nine out of 10 policyholders now have to pay more for their health insurance.
Laya research shows that 83pc of people leave the health insurance market because of price, the company said.
"Laya Healthcare is asking that no new penalties – namely an increase in levies or a further cap on tax relief – are introduced in Budget 2015 by the minister for finance."
Mr Clancy said that if 300,000 people have been forced out of the private system, the place for them to go is the public health system.
The Laya boss welcomed the move to introduce lifetime community rating, which will mean that people who wait until they are over 35 to join will be penalised after May 1.
This is intended as a refinement to the system where everyone pays the same for the same cover, irrespective of their age and health status.