Government health insurance plan will shut out 1.9 million

As many as 1.9 million people are at risk of being permanently frozen out of health insurance, thanks to the government's new lifetime community rating system, insurance industry experts have warned.

The government's plans - which are designed to bring young policy holders back into the market, rebalancing the demographic skew - would see a 2 per cent annual loading on top of the price of health insurance for anyone who takes out a policy for the first time after the age of 34.

People who used to have health insurance but let it lapse can avoid additional charges by taking out a new policy before May 2015.

One of the consequences of the scheme, according to Dermot Goode, Cornmarket's general manager of health insurance, is that it will permanently freeze out a large cohort of people who currently can't afford health insurance.

''They have stated there'll be credits for people who had insurance but had to let it go, Goode said. For those people ''there is a huge inertia factor and they will get their insurance before May 1, he said.

''But there's another category of people that I have huge sympathy for, and that's people who'd love to have insurance but just can't afford it. If they can't get on the first rung of the ladder now [with health insurance companies already slashing prices], they'll find themselves permanently locked out of health insurance, he said. That could include a huge chunk of the 2.5 million people who don't currently have inpatient health insurance policies.

According to figures supplied to The Sunday Business Post by the Health Insurance Authority (HIA), the statutory regulator of the Irish health insurance market, just over 2 million people in Ireland had inpatient health insurance plans at the end of March 2014.

On the basis of the most recent CSO population estimate (of 4.6 million people), that leaves around 2.5 million without health insurance plans, said Micheal O Briain, head of regulatory affairs at the HIA.

Around 14 per cent of adults have relinquished their health insurance in recent years – roughly 650,000 people. This would ''indicate that the number of people who have never been covered by inpatient health insurance plans is approximately 1.9 million people, O Briain said.