Health policy costs on the rise

The average private health insurance premium paid by consumers increased by almost one-third between 2010 and 2015 and the rising cost is expected to continue to outstrip economic growth, according to an actuarial analysis.

Research conducted by the Society of Actuaries in Ireland (SAI) also found that:

  • The ageing of the insured population contributed approximately 2.5% per annum to claims inflation between 2009-2015;
  • Between 2016-2026, the potential inflationary impact on premiums due to further demographic change will be around 1.3% per year.

The analysis, entitled Inflationary Pressures in the Irish Private Health Insurance (PHI) Market, also looked at how take-up of PHI is affected by growth in disposable incomes, relative to premium inflation. For instance, in 2008, the average gross premium was €724; the average disposable income was €22,565; and the health insurance take-up rate was 47.6%. In 2014 the average gross premium was €1,200; the average disposable income was €19,309; and the take-up rate was 40.7%. The figures illustrate that as premiums went up and disposable income went down, the health insurance take-up rate also decreased.

The SAI also considered recent trends in premium inflation and found that while premium increases by insurers between 2010-2015 resulted in a 65% increase in the Health Insurance Premium Index as calculated by the CSO, the average premium paid by consumers only increased by 32%.

This suggested that consumers switching between products and insurers resulted in average savings of around 50% of the price increases proposed by insurers, the report found.

It also identified that for all age groups, as prices increase, customers are choosing different plans in order to keep premiums down. It found that younger customers are more sensitive to price and less sensitive to the benefits offered.

There was good news for the Government in relation to Lifetime Community Rating (LCR), under which loadings are applied to premiums for anyone aged 35 or over taking out private health insurance for the first time. The loadings, applicable since May 1, 2015, are geared to support affordable premiums for all. The report found the introduction of LRC “has been a clear initial policy success in terms of the 105,000 rise in insured lives in open enrolment undertakings seen in 2015”.

However it said “it is too early to tell whether LCR will have an on-going impact on the age profile of the health insurance market”.


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