The introduction of ‘Lifetime Community Rating’ to the private health insurance market was a story that made the headlines this week which generated great interest for those people under thirty five years of age who are considering obtaining private health insurance. On Wednesday the Health Minister Leo Varadkar launched an information campaign which outlined these changes.
Dermot Goode, who is a health expert with totalhealthcover.ie said even though it will be hard for some people to meet the cost of insurance, it ends a huge inequality in the system. In simple terms, this means that any person who fails to take out private health insurance before reaching the age of thirty five, will incur a 2% loading per year from the 1st of May 2015 on top of their premium.For example, if you take out a private health insurance policy for the first time at the age of thirty seven, you will pay 6% on top of your premium, that’s 6% more than someone who took out their cover before the age of thirty five. The reason this LCR is being introduced is to incentivise younger people to take out private health insurance which helps spread the costs of older and less healthy people which in turn will help to support affordable premium levels for everyone. Anyone over the age of thirty five who has a break in cover on their private health insurance in excess of thirteen weeks, will also incur a 2% loading on top of their premium.
According to the Department of Health “thirty five is considered to be an appropriate age to allow young people sufficient time to complete education and to achieve secure employment for a number of years.” It says that the method used to calculate the rate of loadings is based on an assessment across all ages in the market, “2% per year is considered to be a reasonable rate of increase without being overly punitive.” It also states that “the maximum loading that can apply is 70% of the total premium which would only arise on rare occasions where a person aged sixty nine or older is purchasing private health insurance for the first time.”
I decided to seek the views of people between the ages of twenty four and forty; I took to the streets of Drogheda in County Louth to ask people what their thoughts were on this. This vox pop which is included in this blog has varying opinions. In my own opinion, this initiative is a good idea because ultimately by incentivising younger people to take up private health insurance, it will reduce premiums right across the market as well as reducing the pressure on the public health service by taking those younger people out of the public health system. Also, those who have obtained private health insurance under the age of thirty five will ultimately pay lower premiums in years to come as they find themselves needing health care. However I feel that in order for this initiative to work, private health insurance providers must set a premium that is fair and affordable for those under thirty five. However, some people that I have spoken to do not share my opinion. Some feel that they cannot afford private health insurance as it stands for a number of reasons – many have experienced salary cuts since the economic downturn and indeed many have become unemployed, resulting in them being left with no other alternative but to give up their private health insurance.
Note: Information on private health insurance policies can be obtained from the Health Insurance Authority at www.hia.ie