Today saw the release of a report by Colm McCarthy, commissioned by Aviva Health, on the future of the health insurance market in Ireland. The report made some interesting findings including what the likely effect of  public bed redesignation would have on premiums. While the report was only puplished today, some of the more interesting findings are as follows:

1. according to the latest population figures, rapid shrinkage in the 20 to 39 age bracket is set to contunue as population growth in the older age group continues to gather pace.
2. For every scheme member aged over 60 in 2008, there were 2.21 members aged 18 to 39. This ratio has since fallen to just 1.54.
   The proposed public bed re-designation will add about 13% directly to premiums on a full-year basis. The continuing drain of young adult members will result in upward pressure on premiums. Our expectation is that these two effects will mean premium increases in the region of 20-25%.
3. The health insurance industry is not making significant profits (1.3% of premiums in 2011. Some business written at today’s premiums is not profitable and there is an independent, upward, momentum to premiums from this source.
4. VHI must be re-capitalised by the Government, as a result of a European Court decision. If premiums are forced up by the proposed public bed re-designation, the re-capitalisation cost rises, diluting the Exchequer benefit.
5. The private health insurance model, based on community rating, is becoming fragile in the face of escalating premiums and unbalancing of the membership age structure. In the absence of measures to encourage private health insurance membership, the momentum in the figures continues to be downwards. This has implications for the government’s plans to introduce Universal Health Insurance by 2016.

In brief this report makes some very important points for consumers to understand, mainly that for the most part, the controlable factors responsible for the continued rise in the cost of health insurance in Ireland has been driven by Government policy and and not greedy Private Health Insurers. In fact, figures show that the profit margins for insurers are actually very conservative when compared with other types of insurance.

While this report might go some way to helping consumers understand that when they open that renewal in the post, it’s not always the fault of the insurers. However I’m sure the intended audience was the Departments of Health and Finance with the hope of firing a shot across their bow in the hope that at the very least they will reconsider recent announcements on the redesignation of Public beds. Both Individual and Corportate consumers wait with bated breath to see if it has the intended consequence.

Patrick Brennan

Irish Health Insurance