Mattie McGrath (Tipperary, Independent)
Link to this: Individually | In context | Oireachtas source

2404. To ask the Minister for Health his views on whether the lifetime community rating for health insurance can be examined on a case by case basis given that in some cases the amount the customer is paying more to the State between the rating and the Government levy than the cost of the premium for the cover; if he will review the manner in which the lifetime community rating is calculated by reducing the number of years over 34 years of age that a loading is applied; his views on whether there is justification for such a large levy being placed on such policies; and if he will make a statement on the matter. [20710/21]

Stephen Donnelly (Wicklow, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Our health insurance system is voluntary and community rated. Community rated markets depend on a continuing influx of younger people. In a community rated health insurance market, insurers cannot charge individuals more for health insurance based on the likelihood that they will use health services. For this to work, the market needs a balance of younger and older people, based on the principle of inter-generational solidarity.

Lifetime Community Rating encourages people to join the private health insurance market at a younger age. Lifetime Community Rating was introduced in May 2015 to encourage people to join the private health insurance market at an earlier age and thus avoid late entry loadings of 2% per annum, which may apply at age 35 and older. The application of loadings is mandatory and applies to the premium of anyone aged 35 and over taking out health insurance for the first time.

Following a review of the system of Lifetime Community Rating in 2017, by the Health Insurance Authority, amendments were made to refine the system, including the fact that any loadings that are incurred are now applied for ten years where previously the loadings applied for life. Additionally, following this review, the maximum loading that can now be applied is 70% of the gross premium. When an individual customer purchases health insurance, the insurer calculates the loadings that should apply based on any previous periods of health insurance cover and the age of the individual customer at the time of purchasing health insurance.

It is important to note that Lifetime Community Rating loadings go to the health insurers and not to the Exchequer. The community rating levy which is charged on all health insurance products also does not go to the Exchequer, instead it is gathered into the Risk Equalisation Fund and then paid back to health insurers in the form of risk equalisation credits, which subsidise the extra costs for insuring older and sicker customers on a community-rated basis.

It is also important to note that the purchase of private health insurance is optional and that people who do not take out health insurance continue to have an entitlement to services in the public hospital system.