Young healthy people should take out only basic cover and upgrade if they get sick

Brendan Burgess

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I have moved this from another thread to keep the debate separate from the key practical point made in the other thread.

I have long argued that as young healthy non smokers pay the exact same price as old unhealthy smoking alcoholics, it's very bad value for the healthy and great value for the unhealthy.

Therefore young, healthy people should not buy health insurance.

The waiting periods for existing illnesses rise at 55, so age 44 is a good time to take out cover.

I have discovered today, that if you upgrade from basic insurance to a top policy, the upgrade has a two year waiting period.

So people in their 40s might consider taking out health insurance, and then upgrade it if they do get ill. They would have a two year waiting period instead of a 5 year waiting period. In the meantime, they would of course be covered at basic level.
 
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Age at time of upgrade: Maximum waiting periods
Under 65: 2 years
Over 65: 5 years
Maternity benefits: 52 weeks


Current Market Practice

Inpatient benefits

As of 1 Jan 2012, Aviva Health, GloHealth and laya healthcare only apply the waiting periods above to higher inpatient benefits, for illnesses that developed before you switched plans and for maternity benefits. Vhi will apply waiting periods to higher inpatient benefits for illnesses that develop after you switch and for illnesses that developed before you switched plans.
 
Brendan Burgess said:
I argue that young healthy people should not bother with health insurance at all. But maybe they should take out the most basic cheapest policy and then upgrade if they get sick. This cuts the waiting time to two years from five years.
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Doesn't this approach destroy the principle of intergenerational solidarity, increasing the cost for older people and eventually pricing people out of the market.
 
Perhaps it does, but given the current high cost of HI for the average family, this would be very low on a list of reasons to keep cover. Equalisation as a concept sounds great, if you are on the right side of it. However when funds are tight and necessity for retention of health cover on healthy kids is questionable, choices need to be made. This brings back the rationale for Universal Health Cover. Given todays announcement re premium increases, more families will be making the choice to cut back on cover. i.e. the healthy majority who help to finance those who make most use of their cover. In turn this will lead to further price increases. How long can this cycle continue, without some level of Government intervention??
 
I think "equalisation as a concept sounds great" is putting it a bit mildly. It's the fundamental basis on which HI operates. Without it you're on a very quick slide towards collapse of the insurance market and a move towards self payment which very very few of the insured can afford. How much private healthcare can you buy with €1,000?

There's absolutely no question that at an individual level it makes perfect sense for the young and healthy to pull out of private HI. My point is simply that unfortunately, this policy quickly affects wider society and those individuals won't have a market to turn to down the road.

What government intervention do you feel would assist: permitting insurers to charge more for late joiners?, moving to a full insurance model with subsidies for low incomes or something else entirely?
 

I think it is too late when one is ill to upgrade and wait two years for extra cover. A person should have a reasonable policy in place to give benefits that would suffice in the event of serious illness.
 
I agree it's not (economically) rational for a young person to buy health insurance. The only way for risk equalisation to work is to make health insurance mandatory and force the young to subsidise the old and sick. Now that health insurance companies have lost the subsidy of cheap beds in public hospitals the market is collapsing in slow motion. Every time a young person cancels a policy it becomes a little more expensive to provide cover to the remaining customers and prices have to rise, pushing more young people out, pushing prices up etc. etc. until only the old and sick have want to buy cover (but won't be able to afford it).

This problem is common in insurance markets, its a form of adverse selection.
 
I'm in my 40s and feel like I'm on a slow train crash called health insurance.

I've always had it, mostly as a company benefit but latterly at my own expense.
Now, having paid in for years (blessed with good health TG) and reaching the age where I may need it, I'm reaching the break point.

I'm feeling pretty angry about it I have to say.

I have sat down and reviewed a few times and it's head wrecking.
 
+ 1 here Romulan.

The reported 20% increase by Laya on top of the VHI announcement is making a complete mockery of health insurance.

Laya should change their name to Layan .... looking after you always NOT!

Mine is due for renewal in February and like you I'm mad as hell about the whole thing as well.
 
I'll get in by the skin of my teeth Brendan but the whole issue of health insurance costs continually increasing is gone beyond ridiculous.

I'll escape this year but next year it'll be the same old story. It's a lot of money for 365 days cover.
 
If you get sick and then try to upgrade your cover, is the waiting period not longer for a "pre-existing" illness?
 
PolkaDot said:
If you get sick and then try to upgrade your cover, is the waiting period not longer for a "pre-existing" illness?
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This is the point I am trying to make. It appears that the waiting period is only two years for the upgrade,compared to 5 years for new insurance.

Brendan
 
tvman said:
I agree it's not (economically) rational for a young person to buy health insurance. The only way for risk equalisation to work is to make health insurance mandatory and force the young to subsidise the old and sick.
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Why? The old don't subsidise insurance for the young in any other insurance market. Why is should intergenerational solidarity only be invoked when it favours the old?
 
Nermal said:
Why? The old don't subsidise insurance for the young in any other insurance market. Why is should intergenerational solidarity only be invoked when it favours the old?
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In addition, I don't buy the risk equalisation argument.

VHI are paying out more as they have an older profile of subscriber, but seem to forget that most of those older subscribers are long term members, maybe with 40 yrs subscriptions. So VHI had the profit from them when they were young but did not create proper reserves for these people to cover their old age with proper medical inflation factored in. By not making reserves, they kept premiums artificially down, making the market difficult for competition. Other providers now have to pay for this.
 
Everything ia always VHI fault!!! Even the Laya price increase is VHIs fault apparentyl! Makes me laugh
 
At age 55, the initial waiting period for new illnesses rises from 26 weeks to 52 weeks. In other words, if you are 54 years old and you get sick on week 27, you are covered. If you are 55 years old, and you get sick on week 51 you are not covered.

Before 55, there is a waiting period of 5 years for existing illnesses. This increases to 7 years when you are over 55.

If you develop an illness which will require ongoing treatment in hospital, you should probably take out health insurance, irrespective of your age.

Likewise, smokers should take out health insurance, irrespective of age, as the non-smokers will subsidise their premiums.
 
I don't think I would want to risk having to wait 26 weeks if diagnosed with a serious illness. Everyone should have health insurance as a matter of responsibility to themselves or their families. Pre-existing condition clauses should be removed.
 
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