Re. "risk equalisation" (aka "community rating"):
http://www.irishtimes.com/newspaper/ireland/2012/0105/1224309833632.html
So, younger customers have a levy heaped onto their health insurance
premiums in order to subsidize older (less healthy) customers.
Sounds fair. Of course older customers should have good access to
quality healthcare. This is an advanced, Western democracy with a
strong belief in state-provided welfare. In the absence of a
properly-funded public health system, I am in favour of state
assistance for older people's insurance premiums.
I do, however, have a problem with the state assistance being funded
by a levy on less risky customers' premiums. Why are the customers of
health insurance companies being singled out, rather than the general
taxpayer? Imagine if that's how other policies worked:
1. A levy on coal and logs in order to pay for the winter fuel allowance.
(COMPLETE NONSENSE: the winter fuel allowance should be paid "by
everyone" from the public purse).
2. A levy on "safe" drivers to pay for "unsafe" drivers. (Actually, we
already have this: female drivers pay higher premiums in order to pay
for the antics of less safe male drivers, as insurers are - IMO
misguidedly - forbidden from discriminating on the grounds of gender)
(COMPLETE NONSENSE: unsafe drivers have a way of bringing their
premiums down: drive more safely!)
3. A levy on bus and train fares to pay for free transport for pensioners.
(COMPLETE NONSENSE: if pensioners are entitled to free transport, why
should that be funded by solely by other passengers? It should be paid
"by everyone" from the public purse)
So why is health insurance so different?
The main claim by the government is that it is trying to bring
competition into the market and that the incumbent provider (VHI)
faces unfair competition, on account of its older customer base.
Without "risk equalization" newcomers into the market would simply be
able to cherry-pick younger, healthier customers. In my view this
overlooks what "insurance" is - a premium. based on risk. Why
shouldn't newcomers cherry-pick customers? That's what competition IS.
Why shouldn't they provide them with the product they're demanding (a
risk-based premium that will pay for various health services in the
event of illness)?
I don't mind (in fact I ADVOCATE) premiums for older people
(especially those who - in many cases - have dutifully paid their
insurance premiums for the past 40 years) being subsidized by the
state. Provision of assistance to those in need is the duty of the
state, but NOT of private companies or their customers.
The quality of healthcare in Ireland is very good BUT the way that it
is funded is completely messed up. The government is desperate for
older people to be able to afford private health insurance, as
otherwise their healthcare requirements will need to be met by the
state (which the state can't afford to do!). Claiming that they're
guided by some principle of "fairness", they've decided to make health
insurance significantly more expensive for ALL customers, instead of
trying to provide a quality public health system for all.
The result is going to be a spiral of younger, healthier people
canceling their health insurance policies, leading to even higher
premiums, leading to more cancellations, etc. Net result: possibly one
or more insurance companies abandoning the market. Maybe this will be
a good thing if it leads to voting-class pressure for the improvement
of the public health system (arguably the reason why the UK's NHS,
despite its faults, is so good).
(Side-swipe: Where did all the money go during the boom years? Drug
companies and consultants have had it far too good for far too long.)
Useful links:
http://www.irishtimes.com/newspaper/pricewatch/2012/0109/1224310002571.htmlhttp://www.irishtimes.com/newspaper/pricewatch/2011/0124/1224288161882.html
