Older generation feels the pinch as families ditch health cover in droves
YOUNG families are being forced to jettison private health insurance in their tens of thousands, new figures reveal.
The number of people with private health insurance who are over 60 years of age is rising substantially – while younger groups continue to exit the market.
The stark age divide is a massive problem for the industry, as it leaves less scope to rely on younger, healthier people to subsidise the claims of the older, sicker generations.
The problem has been worsening since the economic downturn began, the statistics show.
In 2008, there were 334,372 people in their late teens and 20s with health insurance, but this dropped to just 234,221 by the end of 2012.
People in their 30s have also given up their insurance in big numbers – down from 370,084 in 2008 to 314,142 at the end of 2012.
Those in their 60s – a group more likely to make claims – made up 188,676 of the privately insured in 2008, and their ranks had risen to 212,223 by 2012.
The over-80s accounted for 37,014 in 2008 but this age group grew to 37,410 by 2012, the figures provided by Health Minister James Reilly revealed.
Commenting on the trend, health insurance expert Dermot Goode said the older age groups would be people who already had insurance.
They were ageing and "graduating" into the older age groups, swelling the numbers there – which was an issue for the industry, particularly as people are living longer these days.
The ageing client base of health insurers was costing them more and could push up premiums even further, he warned.
This financial pressure is in addition to recent Budget changes to tax relief, which will mean rises of between €50 and €800 a year in the cost of policies.
Mr Goode said that "older people are absolutely holding on to their cover" but younger people are ditching it.
"As the pool of private health insurance subscribers shrinks, the age profile of what is left increases – because all the young people are leaving.
"Then your claims costs go up and the insurance companies pass on more increases. That in turn forces more young people out. It is a vicious circle."
As people turn 50 and 55 years, they will generally choose to re-mortgage the house rather than give up their health insurance, said Mr Goode, who runs Healthinsurancesavings.ie.
"They are the ones who will not let it go – and the concerning thing is that it is the young people who are letting it lapse," he added.
Since October 16, tax relief for medical insurance premiums has been restricted to the first €1,000 per adult and the first €500 per child insured.
Any portion of premium paid in excess of these ceilings will no longer qualify for tax relief. The Revenue Commissioners estimate that it will affect 577,000 policy holders covering 1.1 million adults and children.
The Department of Finance has insisted that many of these will only be affected marginally, depending on the cost of the policies.
"In addition, individuals can of course opt for less expensive policies and therefore avoid the impact of this measure entirely," said a spokesman.
But insurers insist that the vast majority of premiums will be hit.
And families were already under pressure as a typical policy has shot up by 150pc since the downturn began in 2008.
Dr Reilly has pointed out that the number of people insured continues to decline since it peaked at almost 2.3 million at the end of 2008.
"The reduction in numbers has occurred in all age groups, but particularly in the 18 to 29 age group," he said.
"The loss of younger insured adults from the private health insurance market has a strong impact on inter-generational solidarity, which underpins our community-rated health insurance market."
But he said younger age groups who exit private health insurance are unlikely to place a burden on the public health system because they tend to be healthier.