Monday 20 August 2018

Health insurers have 'no excuse' for hikes - but cuts can't be forced

Stock photo: Getty
Stock photo: Getty
Cormac McQuinn

Cormac McQuinn

Minister Simon Harris can't force health insurers to cut premiums, but warned there's "no excuse" for the companies to hike policies in the absence of increased levies next year.

While the Government's plan not to raise levies on most insurance policies, and to cut it for basic packages, brings hope that prices will fall, the Government can't force companies to lower their rates.

But Mr Harris last night told the Irish Independent that his message to insurance companies was "that there's absolutely no reason or excuse now to increase people's premiums".

The Government's plan not to raise the main levy, and to cut it for basic packages, came on the back of a review of the market carried out by the Health Insurance Authority (HIA).

Its report found a reduction in market average claims cost per insured person and therefore recommended a decrease to some levies. Mr Harris said he took the HIA report seriously as it was an "evidence-based approach that is taken in terms of the risk equalisation scheme and community rating".

He said the bill would be published in the coming days and it needed to be passed by the Dáil by the end of the year.

The existing rate of stamp duty for high-level cover will remain €444 per adult and €148 per child. From April, the duty on basic public hospital cover will drop by 9pc to €177 per adult and €59 per child. The changes could result in savings of up to €45 for an adult with 'non-advanced' (public hospital) cover and €15 per child.

Industry analyst Dermot Goode questioned whether the plan would lead to cuts in premiums, suggesting instead it may have a "dampening effect" on increases.

Claims

He said there were three factors that lead to health insurance price hikes: the cost of claims to insurance companies, increases to the levy, and rules that allow public hospitals to charge patients private rates if they are insured.

Mr Goode said the scenario where insurance companies can be charged hundreds of euro for a public room if an insured patient signs a form when they're being admitted into hospital is the "elephant in the room".

He said legislation allowed the hospitals to do this and it was a "widespread" practice that had cost the industry €200m.

Mr Goode said the Government's plan for the levies was welcome as it takes one factor that leads to price rises off the table. However, he added: "Is it enough to make sure there'll be no price increases? We're not there yet."

Mr Harris's proposals also aim to limit the financial burden to customers subject to 'loading' that sees people pay more if they take out health insurance later in life than those who opened policies at a younger age.

The plan would limit loading to a period of 10 years, which Mr Harris said "brings about a degree of fairness" rather than the extra costs continuing indefinitely.

He also said another area being looked at was the issue of returning emigrants who wished to resume health insurance here and how they were affected by loading due to gaps in their cover.

Mr Harris said they should have nine months from when they return to take up insurance without being subject to extra costs.

Irish Independent

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