Editorial: Late-entry loading for health cover a no-brainer
Published 08/07/2014 | 02:30
The salient question around the decision to charge higher premiums for people who join the health insurance market late is, why did it take so long? From next year, people aged over 35 who take out health insurance for the first time will be charged a penalty for their late arrival. The extra cost will be worth an extra two per cent a year. Allowance will be made for previous periods during which the individual held health insurance and for periods where they were unemployed during the economic downturn and, therefore, couldn't afford health insurance. Existing health insurance customers who retain their cover will not be affected.
Known as Lifetime Community Rating, the measure was finally signed into law by Health Minister James Reilly. The move is probably one of his final acts as Health Minister, before he is dropped from the position in the reshuffle.
Under the current system, age at entry into the private health insurance cannot determine the premium a person would pay. The health insurance market needs young people to come in and help to pay for older people who make claims.
Protection is there under risk equalisation to ensure older people cannot be victims of higher premiums because of their age. Young policyholders eventually get old themselves and, therefore, benefit over their lifetime. But there was provision in legislation for lifetime community rating to be introduced for the past 15 years. Dr Reilly has had a report sitting on his desk for the past six months telling him to go down this route. All he had to do was sign a regulation. It's a no brainer.
The first time 'late-entry loading' was recommended was in a Government White Paper on private health insurance in 1999. Fifteen years on, the common-sense measure is being implemented. Dr Reilly's levels of activity in his department seem to be intensifying as he heads towards the door.
If only he had shown such urgency for implementation at an earlier stage.
Of course, if Universal Health Insurance comes in, there most likely won't be any need for Lifetime Community Rating. But that's a tale for another day . . . and another minister.