The current system for rating community health insurance in Ireland is unstable and should be replaced, according to a report by independent experts presented to the Minister for Health and Children. The report recommends that "single rate" community rating should be replaced by an "unfunded lifetime" system. Under this system, for a given level of insurance cover, premiums rise with age at entry: "All policyholders who entered insurance at the same age pay the same premium." For example, in a given year, two people, aged 80 and 30 respectively, who had entered the health insurance scheme at the same age, would both pay the same premium.
"If the current structure of private health insurance - single rate community rating - did not already exist," the report says, it "would not recommend its introduction, because of the potential instability which arises from the need to ensure a continuing flow of new young members".
It would instead recommend the "funded lifetime community rating system". However, an immediate move to such a funded system is not feasible, the report warns, "because of the very substantial costs involved". These costs reflect the "unfunded liability", estimated at £3.3 billion, represented by the expectation of current health insurance policyholders that their future healthcare needs will be met in return for the current level "single rate community rated" premiums.
Medical inflation poses a major threat to the stability of private health insurance, and the need to restrain it is imperative, the report says. It recommends that the present rating system "should not be extended further".
It also recommends that the current requirement to "compulsorily community rate" ancillary health insurance cover (such as GP and dental cover) should be removed.