The Government has deferred its plan for major reform of the health service, with the new Minister for Health, Leo Varadkar, both postponing the abolition of the Health Service Executive and delaying the introduction of universal health insurance. Instead, Mr Varadkar has focused on tackling problems in the private health insurance (PHI) market. Between 2008 and 2013, the cost of average PHI cover rose by 58 per cent, in part because successive governments increased charges for health insurers – paid for by members in ever-higher premiums.
More expensive health insurance and the impact of the recession meant private cover became unaffordable for many. Since 2008, some 280,000 people have opted out of PHI schemes, adding to the financial difficulties of the health insurance companies and increasing pressure on the public health service as more people become solely reliant on public health cover.
Mr Varadkar hopes to stabilise the market, by making the companies an offer he hopes they cannot refuse: namely, a Government commitment not to increase taxes on the companies in return for their agreement to a two-year price freeze on premiums. It is hard, however, to see the companies accepting his offer – at least in its current form. A promise not to raise tax and charges further is not a commitment to reduce them.
Besides, the Government has no control over either medical inflation or the rising cost of claims from policyholders, which push up premium prices. Private health insurers have already lost too many of their most profitable customers – those in the younger age groups who make few policy claims. The Minister’s plans for discount rates to encourage younger people to take out health insurance, and the introduction of lifetime community rating – ensuring those who take out insurance later in life will pay more – should make a difference. But much more needs to be done to ensure the sector gains, rather than loses, customers.