Tuesday 21 October 2014

Some relief for those paying health insurance is long overdue

Published 13/07/2014 | 02:30

James Reilly

HARD-hit householders that have health insurance have at last seen a measure introduced that may ease the price pressure on premiums.

New rules are coming in May to penalise people who wait until later in life to take out insurance.

People over the age of 35 will have 2pc a year applied to the cost of their policy. This will see a couple in their 50s, taking out cover for the first time, being hit with a penalty of more than €500 on two plans that cost €1,000 each.

This should see thousands of people in their 30s, 40s and 50s joining the market for the first time, with others re-joining.

More members will mean more premiums, which will mean more income for the VHI, Laya, Aviva and GloHealth.

The new rules are an attempt to refine and improve community rating - the system where everyone pays the same premium for the same level of cover, irrespective of age and health status.

The twist is being called lifetime community rating.

In Australia, where a similar system was put in place, there was a surge of younger people taking out cover for the first time, according to regulator, the Health Insurance Authority (HIA).

This means the health insurers will be big winners. Pressure must be brought to bear on them by the HIA to, at least, stem the tide of premium rises. But the HIA should go further and force them to share their gains from a wave of new members by cutting premiums.

The other big issue is just why it has taken so long for this measure to be implemented.

Sure, it will not suit everyone. People who have been forced by the squeeze on household incomes to ditch health cover will not be pleased.

There will be a grace period until May 1, when people can take out health insurance or re-join without any penalty.

There will be credit given to those who have lost their job in the last three years, and lower penalties for those who had cover at some point in the last while.

But unless insurers respond by lowering premiums, the benefits of the new system will be swallowed up by the insurers.

The fact that it took former Health Minister James Reilly so long to introduce this measure didn't reflect well on him.

The legislation for this measure was already in place.

Dr Reilly and his Cabinet colleagues seemed to have been on an all-out assault on health premiums for a fair while.

In the last few months we have seen tax relief restricted on health cover, higher levies imposed on all policies, and higher costs being imposed for the insured to use public hospitals.

So, some relief for those paying for private health insurance is long overdue.

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