• Force a further 300,000 out of health Insurance
• Estimates potential reduction in number insured to 35% by 2015
• 90 million exchequer cost

The Insurance Ireland Health Insurance Council, which includes the State’s four main insurers, has warned that the Government’s proposed new public bed charge will lead to an increase of over 30% in health insurance premiums. In a submission to Government, the Council said a price increase of this magnitude would force large numbers (in excess of 300,000 members) out of the health insurance market, leaving just over one third of the population insured by 2015. 

This substantial reduction in the percentage insured, down from 51% in 2008 to an estimated 35.7% in 2015, would have a two-fold impact:

• it would greatly increase reliance on the public health sector adding to the burden on the exchequer;
• it would also sharply reduce the income stream public hospitals get from privately insured patients.

The net effect would be a cost of approximately 90 million to the exchequer.

Kevin Thompson, Chief Executive, Insurance Ireland, stated that “Not only will the Government fail to raise the additional funds as planned in the Budget, in the process it will provoke profound volatility that could destabilise the health insurance market in Ireland. Those most likely to leave the market are the young and healthy without whom insurers will be forced to increase premiums to pay for older and sicker customers, creating a vicious circle of falling customer numbers and ever rising prices.”

The recently published McCarthy Report on the future of the private health insurance market clearly showed that, unless young people were attracted into the market in greater numbers, the entire system of community rating would become unviable.

Mr McCarthy warned that the analysis contained in his report “should serve to caution that any proposal to add further to health insurance premiums could further destabilise an already fragile and contracting market.”  The new charges which the Minister has set out in the Health Amendment Bill are a serious blow to a market that is already in decline.

The Council said the best opportunity the Government had to raise the funds it has ear marked from its new public beds charge was to engage with the private health insurers to implement a number of sustainable cost reduction initiatives.

The Council said the acceleration in the decline of the insured population as a result of the new public bed charge would also create huge difficulties for the Government’s proposed reform agenda. Most notably, it would jeopardise the eventual transition to Universal Health insurance which is stated government policy.

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