Warning health insurance costs for older people could triple

AGE ACTION has called for moves to safeguard the principle of community rating in health insurance after reports that older customers could see the cost of their premiums triple without it.

VHI refused to confirm reports in a Sunday newspaper that it had calculated massive price rises for the over-60s in the event that community rating is abandoned as a result of a shock Supreme Court ruling earlier this summer.

A spokeswoman for the insurer, the country’s oldest and largest, said only that it was in ongoing discussions with the Department of Health about the implications of the ruling and would not divulge details of those talks.

Age Action spokesman Eamon Timmins, however, said the reports added urgency to the quest to find a solution to the difficulties created by the Supreme Court’s decision.

“If the premium hikes reported today were to take place, they would have huge implications for older people and the public health services,” said Mr Timmins.

“Many people on limited incomes would not be able to afford to pay a threefold increase in their premiums.

“This would have the knock-on effect of putting increased pressure on the public health services.”

The Supreme Court ruling delivered in July declared illegal the system of risk equalisation under which health insurers, with a higher proportion of older customers, receive subsidies from newer insurers to compensate them for the extra risk they encounter in carrying a greater share of customers who make more claims.

Without risk equalisation, it was argued, insurers with a large percentage of older customers would have to charge them more than younger customers, which would breach the state policy of community rating. In practice, risk equalisation was to mean payments to VHI from newer entrants to the market, such as BUPA, but it challenged the system all the way to the Supreme Court.

VHI was expecting to get about €40 million in backdated subsidies and about €10-12m annually thereafter before the ruling threw its financial projections into disarray.

While the company has insisted it is committed to providing affordable cover for customers of all ages, its chief executive Jimmy Tolan said at the time of the ruling: “There is no health system I am aware of where you can have community rating without risk equalisation.”

Eamon Timmins last night urged an all-out effort to find a solution. “It is in the interest of everybody — young and old — that the Government explores every legal avenue to find a way of protecting the community rating principle so that people of all ages can afford private health insurance,” he said.