Premium health cover to get even more expensive
PREMIUMS for the more expensive private health insurance plans are expected to rise at a faster rate next year -- but packages offering basic cover could become more affordable.
Department of Health officials and outside experts from Milliman -- who are involved in drawing up new rules governing risk equalisation in the health insurance market -- believe it will put the greatest pressure on premiums for higher plans.
The change will force many customers to reduce their cover to more basic packages, where the subscriber receives care in public hospitals, which are set to become more financially attractive.
Insurers, who have complained about lack of consultation, warned it could stifle competition and incentivise inefficiencies.
Under the new system, health insurers will pay lower levies for subscribers on basic plans and will pay more for those on the expensive plans.
But this means they are expected to pass on the levy in the form of higher premiums for the expensive plans.
The Bill underpinning the new scheme aims to copperfasten community rating -- where all subcribers are charged the same premium for the same level of cover regardless of age or health status.
The scheme, to become law in January, is aimed at spreading the insurance risk among companies here.
It means that the highest subsidy goes to insurers with a higher number of subscribers who are older and make more claims.
Under the new scheme, health insurance companies will pay four set levies that will be paid into a fund and redistributed in the form of credits.
The credits will be based on the age, gender, plan and health status. This is the first time health status will be included and will mean that a subscriber who is more often in hospital will be more heavily subsidised.
Donal Clancy, managing director of Laya healthcare, representing 450,000 members, said he was disappointed at the way the government is "rushing through" the proposals.
"We are currently working through the detail of the Bill and reviewing the exact financial implications for consumers," he said.
He predicted the ability of people to avail of new, innovative benefits would be squashed by the new Bill as insurers will only be permitted to alter benefits across its most popular range of schemes once a year.
"This will stifle competition in the market and will impact negatively on consumers in terms of genuine choice and affordability."