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State to hold down health insurance costs for old people
Sunday, November 16, 2008 By Emma Kennedy and Cliff Taylor
Senior government officials are trying to finalise a plan to hold down the cost of health insurance for older people in the wake of the Supreme Court ruling which struck down the risk equalisation system.

Following the court ruling, there are fears of a significant hike in the cost of health insurance for older people. To combat this, the government is believed to be examining a tax measure that would effectively make it less profitable for insurers to insure younger people and cheaper to provide insurance for older customers.

In this way, the government hopes to be able to maintain some form of community rating where the charge for customers is roughly the same, no matter what age they are. It is not clear precisely what tax mechanism may be used to achieve this.

It could come as some adjustment to tax relief granted to policyholders, which is currently administered by the health insurance companies and passed onto consumers, who pay a price net of tax relief. Other possible tax measures which would operate at the company level may also be considered.

A spokesman for the Department of Finance would not comment on the specifics of proposals but said the cabinet would discuss ‘‘mitigating the cost of health insurance for older people’’. It is not clear whether it will be finalised in time for this week’s Finance Bill.

Last July, the Supreme Court ruled that the risk equalisation system designed to even out premiums was based on an incorrect interpretation of the law, and that it should be set aside.

The scheme had been intended to compensate insurer VHI for the greater risk it faced because of its customer base of older members.

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