I am concerned that private health insurance is becoming harder to afford, especially for older people, as insurers increasingly tailor their insurance plans towards younger, healthier customers. There can be little doubt that price increases will make it more difficult for persons who hold private health insurance to renew their policies. While there has been a decrease in the numbers with private health insurance, by 76,000 in the year to end-March 2012, it is important to note that the decline in private health insurance coverage is modest to-date, at less than 4% of the overall market. This leaves some 2.139 million, or 46.6% of the population, covered by private health insurance. Even in the current difficult financial climate, the vast majority of consumers with private health insurance are retaining some level of health insurance cover.
Provisions in the relevant health insurance legislation ensure switching is as easy and seamless as possible for customers. Many have tended to choose cheaper alternative plans, rather than leaving the market altogether. Consumers have a legal right to switch between or within insurer to get better value and to reduce their premium costs. The evidence to date is that many people are changing their product choice or insurer following significant price or product changes. It is not open to a company to refuse a customer of another insurer the same level of cover. All plans are available to all customers, regardless of whether you are an employee of a particular organisation or not. Policy holders can switch to the same level of cover without waiting times for cover to apply.
In addition to the choices available to consumers in the health insurance market, the Government's clear objective is for the health insurance market to remain as competitive and affordable as possible, as we move towards a new system of Universal Health Insurance. I am focusing on addressing the problems of the current private health insurance market, where insurers have a considerable financial incentive to cover younger, better risks than older, poorer risks. I am strongly committed to protecting community rating, whereby older and less healthy customers should pay the same amount for the same cover as younger and healthier people. In order to keep down the cost of health insurance for older people, I was pleased to increase significantly the age-related income tax credit for insured persons aged 60 years and over, from 1 January 2012. Without this support, health insurers would have had a strong financial incentive to "segment" the market by offering policies targeted at young people, to the disadvantage of older customers.
In addition, I am keen to explore other available measures to limit the costs related to health insurance. I have agreed with the three commercial health insurers to establish a Consultative Forum on Health Insurance, to tackle issues of mutual concern. This Forum has been established with a focus on generating ideas which would help address health insurance costs, and the insurers have agreed to work cooperatively in driving down costs related to health insurance and to identify savings that could be achieved by both public and private hospitals. Bilateral meetings have taken place with each insurer where they have brought forward their own ideas for cost savings in the market. The Forum will also give a voice to the insurers in the development of the new Universal Health Insurance model. I have also made it clear to the health insurers that I believe that significant savings can still be made, the effect of which can be to minimise the need for increases in premiums. In this regard, VHI has commissioned consultants to carry out a utilisation management review of their claims. The review has commenced and will provide a detailed report on the advantages and disadvantages of moving towards greater utilisation management, a cost benefit analysis and a detailed plan on how this might be achieved including the timelines involved, costs and potential savings, if any, that could be achieved.
It is my intention to ensure that the private health insurance market is reformed to ensure that costs are reduced and that there is a more even balance across the market. I am determined that the measures outlined above will have a significant impact in containing the level of any future increases in health insurance premiums.