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In classic Department of Health newspeak, so-called ‘lifetime community rating’ means the opposite to the very principle of community rating. Up to 1 May 2015, Ireland’s private health insurance system operated under a system of ‘community rating’, whereby everybody was charged the same premium for a health insurance plan, irrespective of their age, gender or health status.
From 1 May 2015, there will be ‘late-entry loadings’ for those who join over the age of 35. For every year that someone aged 35 years or over does not sign up, they will be have to pay 2 per cent extra on their annual premium. If one does not sign-up until age 40, a €1,000 premium will cost €1,120, if one waits till 50, it will be €1,320. The loading is capped at 70 per cent so if one signs up at 70, the policy will cost €1,700.
So in effect, lifetime community rating means everyone will still be charged the same price, irrespective of health status or gender but critically not their age. Quite simply, anyone over the age of 35 who cannot afford private health insurance will be discriminated against on the basis of their age and inability to pay.
Generally, people on lower incomes are less likely to take out private health insurance because of the cost. From 2005 to 2012, while income fell significantly, there was a 30 per cent growth in health insurance premia, resulting in over 250,000 people dropping out of the insurance market. Many more, probably at least 500,000, opted for cheaper packages with less coverage. There was always half of the population without health insurance, either because they chose not to have it or could not afford it. And increasingly, cost has become the main obstacle to people signing up. Those who held on to their private health insurance coverage post-economic crisis are older and those who can afford it.
This new initiative will result in more people taking up private health insurance, often taking packages which are hardly worth the paper they are written on, and all they will do is prevent people from being charged the extra levy in the future. However, even this does not make economic sense. If a 35-year-old does not sign up until they are 50 and they live until 80, they will pay an extra €3,600 for not having paid up. However, that same person will have saved €15,000 by not signing up — a net gain of €11,400. Of course, these sums are dependent on not needing your private health insurance between 35 and 50. Yet, if someone has one of the new-entry packages, then they are probably not covered for most aspects of care anyway.
The purpose of lifetime community rating is to encourage people to purchase private health insurance at a younger age so as to make the health insurance market sustainable by spreading the costs of older, less-healthy people across the market. This is how insurance works — by spreading risk. However, if all the new entrants are on ‘yellow-pack’ policies, then lifetime community rating may backfire as there will be insufficient funds to spread the risk.
There are lots of other anomalies — given that the Government committed to universal health insurance by 2019, where it would be compulsory for every citizen to have health insurance — why on earth would anyone sign up now, if everyone will have it in five years’ time? The reality is that Government will not deliver on this and given the fundamental flaws in their proposed model, that is no harm.
So what is the Government up to, scaring many who cannot afford it into the private health insurance market? It is prioritising short-term political (and private health insurance companies’) gains over the medium- and long-term public good. It is maintaining the status quo, which privileges the access of private patients over public patients. It is a purposeful step backwards on the road to universal healthcare, propping-up the profits of private health insurance companies and Ireland’s inimitable two-tier system of healthcare.
Irish citizens pay for healthcare in many different ways — through taxes, out-of-pocket payments, private health insurance premia.
This system is exceedingly complex, wastes money and inhibits access. There is a better way of spending this money, whereby everyone can gain access on the basis of need. The introduction of ‘lifetime community’ rating quite clearly shows this Government is happy to stand by the better-off and has no intention of finding that better, fairer way for all our citizens to access essential healthcare.