Private Health Insurance
The Department’s role is to promote a sustainable health insurance market and to consider and implement any regulatory changes that may be required to support the market. Since his appointment as Minister for Health, stabilisation of the health insurance market and increasing the numbers holding health insurance is one of the Minister’s key priorities. The Minister continues to focus his efforts on ensuring the market is balanced across all ages to maintain the long term viability of a competitive health insurance market where cover is affordable for all those who wish to avail of it.
Under the Health Act 1970, everyone who is ordinarily resident in Ireland qualifies for public hospital care.
Separate to the Irish public health system, 2.14 million, (end Sept 2016), or 46% of the Irish population, have health insurance and many people opt to be treated privately. Health insurance is optional and people who do not take out health insurance continue to have the same entitlement to services in the public hospital system.
The Irish hospital system contains a mix of public and private hospitals, with public hospitals treating both public and private patients. On admittance to a public hospital, patients make a choice to be treated by a medical consultant on a public basis, or to waive their right to public treatment and be treated on a private basis.
Tax relief of 20% for health insurance premiums is provided at source up to a ceiling of €1000 per adult and €500 per child insured.
How Health Insurance Works in Ireland
Community rating, reflecting the principle of intergenerational solidarity, is a fundamental cornerstone of the Irish health insurance market. This means that people who are old or less healthy do not have to pay more than the young and healthy, whereas in other health insurance systems the level of risk than an individual presents directly affects the premium paid. It also means that premiums for younger or healthier lives are typically higher than their expected claims would require, whereas for older or less healthy lives, premiums are typically lower than the expected claims would require.
The objective has always been that the price of a policy should reflect the risks and costs of the entire pool of insured persons in the community, rather than the risks and costs on a person by person basis. The sharing of risk between younger and older – who predominantly cost far more in terms of claims, is known as inter-generational solidarity i.e. younger people pay more for health insurance than the level of risk they present would demand while older people pay less as a direct consequence. The pricing of risk across the community of insured persons clearly requires robust mechanisms to share costs when there are a number of companies in the market.
If a mechanism to share risk and attendant costs is not present, an insurer with a less profitable risk profile can quickly find themselves in a perilous position financially. The standard transfer mechanism is known as risk equalisation and it is a key element of health insurance, not just in Ireland but internationally. Only through the use of risk equalisation can solidarity and cost sharing be effectively implemented between the generations who hold insurance.
The system is unfunded, meaning that there is no fund built up over the lifetime of an insured person to cover their expected claims cost. Instead, the premium contributed by insured people is expected to cover the cost of claims and expenses in that year and that year alone, in the same manner as other forms of insurance such as motor or home insurance.
Lifetime Community Rating (LCR) was introduced from 1 May 2015 and modifies community rating so that the premium that individuals pay for health insurance increases with the age at which they enter the health insurance market. The premium does not vary in relation to their current age. For example, under LCR a 50 year old who has held insurance since he or she was 30 will continue to pay the same as a 30 year old, but a 50 year old who purchases insurance for the first time will pay more than a 30 year old. If you take out health insurance earlier in life, and retain it, you will pay lower premiums compared to someone who joins when they are older.
LCR was introduced to encourage people to take out health insurance at a younger age and thereby help in controlling premium inflation across the market. Since 1 May 2015 there are ‘late entry loadings’ for those aged 35 and over who didn’t buy health insurance prior to then. The loadings are set at 2% per year starting at age 35, up to a maximum loading of 70% at age 69 and over.
Frequently Asked Questions
The main legislative provisions for the regulation of the Irish health insurance market are included in the Health Insurance Acts 1994 to 2016 and Regulations made under those Acts. The Principal Objective of the Act under this legislation includes the following statement:
The principal objective of this Act is to ensure that, in the interests of the common good and across the health insurance market, access to health insurance cover is available to consumers of health services with no differentiation made between them(whether effected by risk equalisation credits or stamp duty measures or other measures, or any combination thereof), in particular as regards the costs of health services, based in whole or in part on the health risk status, age or sex of, or frequency of provision of health services to, any such consumers or any class of such consumers.
The Irish health insurance regulatory system is based on the key principles of community rating, open enrolment, lifetime coverand minimum benefit and aims to ensure that private health insurance does not cost more for those who need it most.
Consumer Information on Health Insurance
There are a broad range of plans available in the health insurance market, providing varying levels of cover from basic to comprehensive level. This facilitates consumer choice when purchasing health insurance. Consumers should actively seek out plans which offer the most suitable level of cover, and which provide the greatest value for money for their individual needs. Individuals should carefully review their health insurance requirements when taking out, or renewing, a health insurance contract. Many customers can make savings on their health insurance premiums by reviewing the level of cover required to meet their needs. The Health Insurance Authority provides information to consumers in this regard and may be contacted at Lo-call 1850 929166 or www.hia.ie.