COMMUNITY rated health insurance as it exists in Ireland mad not be sustainable in the Ions term, according to an independent report published yesterday.
The report, Healthcare - The Customer Agenda: Charting the Future of the Irish Market for Health Insurance, analyses current and future trends affecting private medical insurance in Ireland, after the arrival of BUPA.
Health Insurance, analyses current and future trends affecting privati medical insurance in Ireland, after the arrival of BUPA.
International experience suggests, according to Mr Simon Glancy, head of research at Prospectus, that the Government's commitment to the status quo in relation to community rating, the principle that everybody pays the same for health insurance, irrespective of age, will be difficult "without making some adjustments to the existing principles on which the system is based".
"This could require the introduction of a series of community rated categories for pricing health insurance based on lifestyle characteristics as well as a wider range of hospital cash plans," said Mr Glancy of Prospectus, an independent firm of consultants specialising in strategy.
The cost of private medical insurance in Ireland is among the cheapest in Europe. "But younger Irish customers, especially those under 30, may no longer accept the need to subsidise the premiums and benefits paid to older policy holders. There is already evidence of this occurring in Australia," said Mr Glancy.
The report warns that the number of people, without such insurance, relying on the State, could increase as a result of the reductions in tax relief for contributions to health insurance plans or increases in premium rates.
The report highlights Australia as an example of a market taking measures to improve the efficiency of its community rated private medical insurance regime.
The rising cost of medical insurance has resulted in a sharp fall in the number of people covered from 64 per cent in 1983 to 34 per cent last year, increasing pressure on the state Medicare system.
An Australian government commission reporting on the difficulties made a number of recommendations. These included the introduction of a no-claims bonus for policyholders; a tax rebate to encourage those already in private healthcare to stay in the system; the introduction of lifetime community rating which penalised through higher premiums those joining later in life, and the introduction of a number of community rating categories designed to make prices more equitable and affordable.
The report says that while Ireland has more favourable demographics than many countries, 20 per cent of the Irish population will be over 60 by 2010. The State's commitment to providing free health care will come under increasing pressure. It is unlikely that the current level of universal state health care benefits will be sustainable in the long term."