Tuesday 21 November 2017

Loading sparks rise in young people taking out health insurance

More than 240,000 of 25- to 35-year-olds now have cover

Took out insurance: Former health minister Leo Varadkar Picture: Tom Burke
Took out insurance: Former health minister Leo Varadkar Picture: Tom Burke
Eilish O'Regan

Eilish O'Regan

More people under the age of 35 are signing up for health insurance - and helping to lower the premiums of older customers.

The controversial decision to impose a loading on the premiums of people who wait until the age of 35 or older to take out health insurance has led to an influx of vital young subscribers, new figures reveal.

There are now at least 240,025 people aged between 25 and 35 with health insurance - a key group in the bid to keep premiums as affordable as possible.

Their premium income, and lack of claims, help shore up the market to balance the number of older, sicker and more expensive members.

The figure for December last marks an increase of 13,785 in this healthy group compared with the end of 2015.

The late entry loadings of 2pc a year for new entrants aged 35 and older was introduced by former health minister Leo Varadkar in May 2015 in a bid to protect community rating, which does not penalise older, sicker people with higher premiums. Mr Varadkar was himself among the thousands who took out health insurance in his own name for the first time to beat the May deadline.

Read More: Late-entry levies are cruel, but system would collapse without younger people

The incentive remains for people, who can avail of tax reliefs, to take out one of the many lower-priced insurance packages before the age of 35.

Health Minister Simon Harris, who released the figures in a parliamentary reply to Deputy Mattie McGrath, said: "The positive impact of these initiatives on the market is now evident, as the number of people holding private health insurance has increased to 2.152 million."

He said a community-rated health insurance market, where everyone is charged the same for the same level of cover, depends on inter-generational solidarity and requires a constant influx of young, healthy members to support the older, less healthy members.

"Young adult rates are based on a sliding scale of maximum chargeable rates up to age 26. This approach ensures the phasing-in of full adult rates and eases the effect of the dramatic price increases when student rates no longer apply," he said.

"Without these measures, there would be a continued deterioration in the age profile of the insured population, which in turn would contribute to claims inflation and result in higher insurance premiums."

He revealed the independent regulator, the Health Insurance Authority (HIA), has already completed a public consultation process as part of a review of the measure so far. It will produce a report to the minister.

Meanwhile, he warned the proposals in a draft report of the Committee on Future of Healthcare to phase out tax relief for private health insurance would make it less affordable.

"As health minister I would caution that making private health insurance less affordable for people by withdrawing tax relief without improving the public health system would only serve to increase reliance on services that are already under pressure and worsen standards for everyone," he said.

He estimated the cost to the Exchequer of providing tax relief on health insurance premiums reached €325m in 2015.

It must be "seen in the context of the overall premiums paid - €2462m and the €2000m claims paid during the same period". This includes income generated from the treatment of private patients in the public system.

A change of policy would mean the sustainability of the health insurance industry and the future viability of private healthcare would require detailed and careful consideration.

"The phasing out of tax relief on health insurance premiums is not something I as health minister would support," he said. "However, decisions in relation to taxation policy are a matter for the finance minister and the Office of the Revenue Commissioners, who would give careful consideration to consequences arising before making a recommendation to Government."

Irish Independent

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