HEALTH insurers will be allowed to penalise customers who delay taking out policies until they are older, under new rules to be introduced by the government next year.
James Reilly, the minister for health, is also bringing in discounted rates for young adults, in an attempt to stop people under 30 from ditching their cover.
The move represents a radical departure from the current system of community rating, under which everyone pays the same price for a similar level of cover, irrespective of their age or health.
Reilly made the announcement during a Dail debate on universal health insurance (UHI). “I am keen to create the best possible environment within which more people will seek to take out and keep health insurance,” he said.
“I encourage younger people to join as early as possible, and to this end we will have in place lifetime community rating and discounted rates for young adults. Lifetime community rating is designed to encourage people to join health insurance schemes early. Late entry loadings are applied to those who join later, but of course there would be a grace period to allow people to take out insurance and a strong communications campaign to give everyone adequate notice of the change.
“It is important that a 50-year-old who has been in the VHI all his life should get some recognition of that fact, vis-à-vis a 50-year-old who takes up insurance for the first time.”
Reilly said he would be introducing discounted rates for young adults “to help address the sharp increase in the cost of insurance faced by young people or their parents around the age of 21, when child discounts cease”. Insurers can offer discounts to young adults up to the age of 23, but only if they are full-time dependent students.
“Subject to the appropriate legislation, I intend to provide for these two initiatives to operate from 2015, allowing for an appropriate notice period for both customers and insurers,” said Reilly.
The minister’s announcement comes a few months after the Health Insurance Authority (HIA) recommended that the minister relax the strict community-rating rule to stop younger people leaving the market in their droves. A report last year by the HIA found 24,000 people between the age of 18 and 29 dropped their health insurance in the first six months of 2013.
Billy Kelleher, Fianna Fail’s health spokesman, said the party had been calling for a system of lifetime community rating for two years. “There’s no point saying it undermines the community rating scheme, because the community rating scheme is already being totally undermined by the fact that there are no young people taking out health insurance and therefore the price for older people is being pushed up all the time,” he said.
A spokesman for Reilly said the new rules were part of the transition to the UHI system. “The minister is keen to create the best possible environment within which more people will seek to take out and keep health insurance, in the transition to a competitive, market-based system of universal health insurance,” he said.
“The minister is also committed to making further improvements to risk equalisation for health insurance and intends implementing the necessary reforms on a phased basis between 2016 and 2018, to facilitate the introduction of a more refined health status measure under the risk equalisation scheme from 2018.”