Since the health insurance market reached a peak at the end of 2008, more than 200,000 people have dropped out. This is probably attributable in the main to redundancy, emigration and lower disposable incomes as the downturn hit. However, the estimated doubling in real terms of the cost of health insurance since 2007 has also been a factor.
Minister for Health James Reilly yesterday indicated that it was possible that a further 60,000 people could leave the market this year.
The main problem for the industry is not necessarily the number of health insurance subscribers dropping out but the category, or to be more accurate the age of those leaving.
The Irish private health insurance market is based on the principles of community rating where everyone pays the same for identical products regardless of age.
In essence this means that younger people – who tend to claim less frequently – are charged more than would normally be actuarially necessary. This money is then used to subsidise the cost of cover for older people for whom the price of insurance could be prohibitively expensive if based on risk.
The problem in Ireland has been that the people who have been leaving over recent years have mainly come from the younger end of the spectrum, begging the question of how the cycle of inter-generational solidarity can be maintained in the future.
The official figures in relation to the numbers of younger people leaving health insurance are stark. In 2009 there were 310,000 people between the age of 18 and 29 covered by the main private health insurance companies. By 2012 that figure had fallen to 230,000. A further 50,000 in the 30-39 year ago group also dropped their cover.
Yesterday the Minister signalled that the Department of Health was examining new initiatives, such as "lifetime community rating" – which would financially penalise those who took out health insurance for the first time later in life.
Without some dramatic moves to control cost increases, private health insurance will not be affordable for many more people, placing further burdens on the public healthcare system.
