Bill envisages healthier paying more for their health insurance
HEALTHIER PEOPLE face paying more for their health insurance as a result of new legislation to regulate the market.
The Health Insurance (Amendment) Bill published yesterday will see people who have had health problems as measured by time spent in hospital, effectively subsidised by healthier people.
This is the first time health status has been included as a measure of risk in the regulation of the insurance market. Up to now the only factor considered was the age of a subscriber.
The largest private insurer, Laya Healthcare, criticised the use of hospital bed nights to incentivise the market, saying it would drive inefficiency and increase the cost of claims by encouraging patients to stay in hospital longer than necessary.
Laya said it was frustrated at the “ill-considered” way the Government was pushing through its proposals for risk equalisation in the market without consultation with insurers.
Risk equalisation involves financial transfers between different insurers to take account of their differing costs arising from the age or health of their consumers.
It operates to protect community rating, whereby older and sicker people can buy health insurance for the same price as younger and healthier customers. Most of the levy goes to the VHI.
The Bill stresses the need for inter-generational solidarity and solidarity between the healthy and less healthy. It also includes measures to discourage insurers from segmenting the market in order to favour the coverage of the more healthy over the less healthy.
The legislation, which is expected to pass through the Oireachtas by the end of this year, extends the period of time an insurer must maintain the price of a contract from 31 days to 90 and imposes a 90-day notice period for offering new products.
The four insurers in the market have been invited to a briefing session in the department today but Laya says this should have taken place before the legislation was published, not afterwards.
It claims the ability of consumers to avail of innovative benefits has been “squashed” by the Bill as insurers will be permitted to alter benefits only once a year. It says the Bill does nothing to address barriers that prevent consumers changing insurer before their policies are due for renewal.
“Unless we seriously tackle the cost spiral affecting consumers in the market, which is primarily being driven by an unfair health levy or stealth tax, and look at ways of reducing the cost of claims, we risk facing a serious meltdown of our healthcare system,” said Laya’s managing director Donal Clancy.