Reacting to Budget 2014, the Insurance Ireland Health Insurance Council, which includes the State’s four main insurers, has stated that today’s Government announcement will have a significant negative impact on the health insurance market in Ireland.
The change announced by Government is based on a flawed and misleading understanding of the market. It was said that this change would affect “gold-plated” policies only but in fact it will impact approximately 90% of all private health insurance products currently on the market. In fact, in their newsletter of February 2013, the Health Insurance Authority, stated that the average premium paid per insured person (including children) was €1,048 (€838 net of tax relief at source).
Michael Horan, spokesperson for the Insurance Ireland Health Insurance Council, said “This is a disappointing day for private health insurance customers and will have significant impact on the cost of their private health insurance for the year ahead. Because of today’s announcement, customers will end up paying more for their health insurance. Effectively the Government has introduced an extra tax on those who have struggled to keep their health insurance. It is important to note that health insurers are NOT increasing premiums. However the removal of the tax relief means that that net premiums will increase. Health insurers had absolutely no notice of this change and were not consulted about the likely impact on the market.”
“We are calling on the Minister to postpone the implementation date of this change to January 1, 2014, to allow health insurers to plan for its introduction in a planned, measured way, to minimise customer confusion. If the change is introduced as proposed, with effect from tomorrow i.e. 16th October, renewals which have already been issued to customers will be incorrect. This will lead to significant confusion for customers.”
Mr Horan continued by stating “Today’s announcement will potentially drive more people out of the Private Health Insurance market as people will be asked to pay more for their policies. Inevitably the younger, healthier customers will choose to leave and those who are sicker will face the stark choice of paying significantly more for their health cover or having to fall back on to the public health system. This could provoke profound volatility that could destabilise the health insurance market in Ireland. The Government has already introduced double taxation for those with private health insurance via the introduction of a charge for all private patients being treated in public hospitals. An additional amount of €30 million will be raised by this charge in 2014.”
At the very least today’s announcement will create huge difficulties for the Government’s proposed reform agenda. Most notably, it could jeopardise the eventual transition to Universal Health insurance which is stated government policy, because further numbers of customers will leave the market.