4,000 people a month cut health insurance

The number of people with health insurance is set to drop below 2 million for the first time in a decade as almost 4,000 people a month abandoned their health cover between April and June.

Figures from the Health Insurance Authority revealed 11,000 people scrapped their plans in the second quarter of 2014, with 41,000 scrapping their health cover in the year to the end of last June.

According to the HIA, 2,017,000 people had health cover at the end of June 2014 — a fall of almost 300,000 compared with the peak of the market in 2008.

However, Dermot Goode of independent health insurance clearing house totalhealthcover.ie estimated that 32,000 people have dropped their health cover since the start of the year, and the number of people with health insurance may have already dropped below 2m, or will do before the end of the year.

“Over the year we are likely to see between 55,000 and 60,000 people cancelling cover in 2014,” Mr Goode said. “The majority of those are aged between 25 and 34 and that trend has continued unabated. They [insurance firms] are losing the very customers they need to keep — they are the ones that do not claim.”

Last month, GloHealth said it hoped to win back customers who had dropped their cover and to encourage other customers questioning their ability to keep paying for theirs by introducing ‘pay as you go’-style packages.

VHI is offering half price cover for all children and students on all their policies, while the Government has also signalled its plans to stem the flow of younger people downgrading or dumping their cover.

There are proposals to allow insurance firm to target people up to the age of 24 with specific plans, while a 2% annual penalty will apply to those who do not take up health insurance by the age of 34 from April 30 next.

However, Mr Goode said the plans aimed at attracting younger people needed to be extended to those aged 29 and, given VHI’s improved financial performance in recent years, a possible reduction in health insurance levies imposed due to community rating.

Those levies now amount to €399 per annum, and Mr Goode also mentioned the Government’s cutting of tax relief in the last budget as another factor in the current trends in the health insurance market. Another worry is that among those who have retained cover, many have downgraded.

A spokesman for the HIA said the 2% penalty would incentivise people over the age of 34 to take out health cover before the policy comes into force, and also said the improving employment situation would have a positive effect in the longer term on the health insurance market. He admitted younger people had been scrapping policies. “It has been a trend in the figures for a period of time.”

Laya Healthcare and Aviva Healthcare have also launched plans this summer, while the HIA estimates that 43.9% of the population has inpatient health insurance plans — down from 50.9% in 2008.