Sir, - The Minister for Health and Children, Mr Micheal Martin TD, has asked me to write about your Editorial "Health Insurance" (July 4th). He welcomes the support you express for the principle and practice of community rating. However, he is concerned that the Editorial could be interpreted as indicating a departure, or a preliminary move, from community rating as a core value in our private health insurance system. There is no basis for any such assumption or conclusion in the Government's policy as set out in the White Paper on Private Health Insurance published last September and from which the recently published Health Insurance (Amendment) Bill, 2000 arises.
The White Paper examined in detail the preservation of community rating, which it recognised as the "cornerstone of the Irish health insurance system". It recognised the importance for community rating of people joining health insurance at a young age and proposed the introduction of the principle of "lifetime community rating". Under this principle, insurers will be allowed to charge an extra premium (in the form of a permitted percentage loading on the standard community rate) to those who join private health insurance for the first time at an older age. This is considered inherently fairer and more stable than the present system, because :
it would reward those who take out private health insurance early;
it would place an appropriate premium loading on those who defer taking out health insurance until later in life when the probability of claiming benefits is greater;
it would be consistent with the general principle of community rating, because a 70-year-old person who joined the system at age 25 would pay the same premium as a new entrant aged 25.
The Government's proposals were informed by the report of the advisory group on the risk equalisation scheme (April, 1998) and various submissions received from interested parties as part of the consultative process carried out during the preparation of the White Paper. The advisory group identified adverse selection (i.e. the process where higher-risk people purchase insurance, and lower-risk people either do not join or leave to avoid subsidising the higher risks) as a major risk to the stability of community rating. The group cited wide-ranging authoritative opinion supporting the taking of measures to give greater stability to community rating. In the particular circumstances of private health insurance in this country, the group recommended a system of "unfunded lifetime community rating".
The measures to be put in place are aimed at greater fairness and stability in the operation of community rating. The regulations to be made will ensure that late entrants to insurance will not be charged disproportionate premiums. Also, insurers are obliged under "open enrolment" to make cover available to all wishing to purchase it and not by reference to whether a person is more or less likely to be a profitable customer.
As stated in the White Paper, the purpose of the Government's decision to introduce the principle of "lifetime community rating" is to underpin the future viability of community rating. This is in sharp contrast to the impression of an erosion of the community rating principle conveyed in your Editorial. The Minister considers it important to provide clarification to your readers on this matter. - Yours, etc.,
Seamus Molloy, Communication Manager, Department of Health and Children, Hawkins House, Dublin 2.