Allowing equitable cover to be eroded now will rebound on us all sooner or later
IN STRAITENED times, we are all under pressure to review our outgoings. For the large number of people with private health insurance in Ireland, this is an important area of household spending. Recent changes by the VHI in its charges – which penalise older customers, by selectively raising the price plans popular with older people – have opened up debate on the role of health insurance and on solidarity between different age groups.
The time in your life when you are most likely to need complex medical care is after the age of 65. Indeed, the costs in the last year of your life make up the bulk of your life’s healthcare spend (although, interestingly, this is less after the age of 65 than for younger people in their last year of life). Most healthcare systems understand that older people are their core group, and plan their funding accordingly.
This was the case in Ireland until about 15 years ago. The Irish private healthcare insurance adhered to community rating, a form of intergenerational support whereby you made lifelong payments at an age-neutral price, providing both for yourself in your future old age and for the community of subscribers. Most younger subscribers were never going to use VHI during their working life, but would be secure in the knowledge that they could use it in later life.
Ideally, this scheme should have contained an element of compulsory enrolment, as there was the possibility of jumping on the train quite late in life without having engaged in this quid pro quo. However, there did seem to be a reasonable societal agreement that community rating served us well.
This was to change in the brash 1990s. The ideal health insurance business is one whereby you pick up relatively low fees from young and middle-aged people (who rarely need the healthcare, and therefore generate significant profits) and deter older people with higher prices or barriers (as they are more likely to need healthcare, and eat into your profits).
The erosion of community rating began with the entry into the market of new insurance firms looking to cherry-pick younger clients with lower rates, knowing that older customers would be less likely to move to them.
In the first decade, there seemed to be a political will to counter this. Risk equalisation transferred profits from firms which targeted younger clients to the VHI, which had a broader portfolio of age ranges. Bupa, discomfited by being unable to focus without hindrance on younger clients, withdrew.
However, the Government seems to have suffered litigation fatigue following the 2008 Supreme Court ruling. The current VHI move, ahead of privatisation, is not only worrying for older people (that’s you and ‘me some years hence). It is also creating a public discourse that seems to blame older people for increased healthcare costs. This is rather like blaming children for creating a need for school places: the business of healthcare is predominantly that of providing care for older people.
So you, as a subscriber, are now facing a Catch-22: if you don’t keep subscribing when you’re young, you may not be eligible to join later in life; yet the recent charges suggest that, despite a lifetime of subscribing, you may no longer be able to afford healthcare when you really need it.
This debate raises the need for a deeper discussion on how we provide a mixed public-private system, and more openness on what you gain from private healthcare. For example, the range of care provided by private hospitals in Ireland is not comprehensive. There is a strong emphasis on elective procedures (hip replacements, cataracts), but less ability to manage complex emergency cases, as the steady trickle of transfers of complex patients from private to public hospitals attests. On the other hand, increasing private bed charges in public hospitals may represent yet more concealed taxation.
As you ponder your household budget this January, consider developing a debate that moves beyond concentrating on the annual choice of company and plan. Do not be tempted to direct your current economic woes against your future self: making a saving this year, but closing doors later in life does not make much sense. Irish consumers need to see these recent changes as a serious threat to their access to a full range of healthcare in later life, similar to the removal of eligibility of the medical card for the over-70s. It is gently ironic that there was general Irish support for US president Obama’s health insurance reforms: can we be sure that we will sustain the same depth of vision and courage here?
Prof Desmond O’Neill is a consultant in geriatric and stroke medicine
