Cheaper cover on way for young in health insurance shake-up
Reward for loyal customers but late entrants will pay penalty
PEOPLE will be rewarded for taking out private health insurance at a young age with cheaper premiums than those who only sign up later in life, the Irish Independent can reveal.
In a major shake-up of the market, Health Minister James Reilly will introduce a loyalty bonus for long-standing customers.
Discounts will also be offered to young people up to the age of 30 to get them to take out cover.
But the move will penalise those who sign up when they're older by making them pay a higher annual premium.
Dr Reilly will also employ a 'carrot and stick' approach to encourage more young people into the health insurance pool.
The move is part of a plan aimed at driving down the cost of health insurance for the consumer.
The minister will allow insurers to charge a higher premium for those who take out insurance for the first time later on in life.
Under the new system -- known as lifetime community rating -- a 60-year-old who took out insurance when he or she was 25 would pay the same premium as a 25-year-old.
But a 60-year-old who gets cover for the first time will be charged more.
Dr Reilly said the community rating system, whereby everybody pays the same for their premium, regardless of gender, age or health history, would remain in place.
But he told the Irish Independent he would go a step further: "I am going to bring in lifetime community rating. What I mean by that, lifetime community rating, that somebody in their 50s or 60s, who has been insured all their lives, or certainly since their 20s, shouldn't be asked to pay the same premium as somebody who decides at the age of 60 to be insured for the first time.
"I think most right-minded people would see that there is a rationale for that," he said.
The reform is recommended in a report on the market. The Consultative Forum on Health Insurance was set up by Dr Reilly to work with insurance companies and the Department of Health to bring down the cost of cover.
The forum will publish its second report in three months' time and it is believed the changes will be introduced next year.
Dr Reilly said the Government had to reform the market: "It is far too costly. It is about getting the insurers to tackle their cost base.
"Private healthcare in this country is far too expensive and very little has been done to address that continuing rise in inflation in this area, when all other areas of the Irish economy were either in deflation or very low single figures."
He said reforms would tackle:
* The cost of procedures;
* Fraud within the system;
* Clinical audits to make sure tests done are necessary;
* Benchmarking of what is charged;
* Passing on the benefits of cheaper procedures from modern technology.
The minister said insurance companies would have to do more to challenge the bills being charged by hospitals.
"Clinical audit really means that tests that are done are actually necessary. It is astonishing to me that we never had this before. The insurers will beef up considerably on their capacity to do that," he said.
"In the past, there were four people involved in dealing with this and they were people who were nurses.
"Excellent people, but how on earth could they challenge a cardiologist? Effectively, it would be very difficult, whereas what you need is another cardiologist to challenge a cardiologist -- even a surgeon wouldn't be appropriate.
"And you need a surgeon to challenge a surgeon as to why certain tests were done. And I have no doubt that we will find huge savings can be made in that area."
Dr Reilly said the reforms would allow the insurance companies to offer incentives to people under the age of 30. "Currently it is allowed between 18 and 23. We'd just extend it to the age of 29," he said.
Dr Reilly said younger people had to be convinced that health insurance was "valuable and something to have".
"You see, you could argue this is going to make it more expensive for others. But, in fact, it will be the opposite. It is going to make it less expensive for others because you will have greater numbers.
"All the claims experience indicates claims rise as you get older," he said. "It is up to the insurers to sell the product."
Fionnan Sheahan Group Political Editor