The introduction of lifetime community rating in the Irish private health insurance market: Effects on coverage and plan choice

In response to declining insurance coverage and adverse selection, in May 2015, Ireland introduced lifetime community rating (LCR) of health insurance premiums to encourage take-up of health insurance at younger ages. LCR requires that late-entry premium loadings be applied to those, aged 35 and over, taking out health insurance for the first time. This analysis exploits quasi-experimental difference-in-differences methods to estimate the effect of LCR regulations on insurance take-up, controlling for potentially confounding factors.

Findings reveal that the introduction of LCR increased coverage rates for those aged 35–69 by approximately 2.5 percentage points (p < 0.01). However, the impact on coverage was largely concentrated in the 35–54 age cohort. Relative to underlying plan coverage rates, take-up was proportionately greatest for low-cover plans.

Ireland is the second country to introduce late-entry premium loadings to its voluntary health insurance market, following Australia in 2000. This analysis adds to the current evidence base and improves understanding of consumer response to these regulations. The introduction of LCR has encouraged insurance take-up by those who may have otherwise postponed take-up to older ages contributing to a reversal in declining overall coverage trends, at least initially. However, the purchase of cheaper plans by relatively younger consumers could be contributing to risk segmentation within the market. Moreover, these cheaper insurance plans tend to offer limited benefits and consumers may still face significant out-of-pocket costs to access private care.