Health insurance shake-up: Young subscribers needed

Lifetime community rating era dawns


The cost of private health insurance has soared – doubling in the past five years – and the number of people with health cover has sharply declined. Since 2008 as the economic downturn took its toll, health insurance premiums rose, and some 300,000 have opted out and dropped their cover. Rising unemployment, declining real incomes and higher premiums all contributed in some measure to making health insurance less affordable. In particular with far fewer younger people paying into a community based health insurance system – where subscribers pay the same premium for the same benefit package, regardless of their age, or medical condition – insurers have become increasingly reliant on their older customers.

However, as the medical needs of the latter group are also greater, consequently they make more claims, which raise the cost of health insurance. In order to keep overall costs down the insurance market needs a larger and more diverse pool of subscribers. Specifically, it needs more younger, healthier, and therefore more profitable, subscribers to broaden the cost base of the insurers. The introduction of Lifetime Community Rating (LCR) from May 1st is designed to achieve that.

That is the deadline set for those aged over 34 to take out health insurance, or else face a higher loading on their policy when they do sign up. And the longer they delay in doing so, the higher the age-related surcharge they must pay when they do. This surcharge increases by 2 per cent for each year over the initial age threshold. So a €1,000 policy acquired at age 34 would from May 1st cost someone aged 50, €1,320 to take out. However, unless the introduction of LCR succeeds in attracting many younger subscribers, the cost of private health insurance will continue to rise and the future of this market will be called into question.

Given the uncertainties that continue to surround the introduction of universal health insurance, it is important that the introduction of the LCR system does succeed in stabilising the private health insurance market.