Continuous real term increases in the cost of health insurance means many will soon have “no option but to start exiting the market”, an insurance expert has warned. 

In recent years, medical inflation has been higher than the general rate of inflation in the economy and that has pushed the cost of health insurance ever higher. 

Today, the Health Insurance Authority announced that close to 1,700 fewer people were insured in the second quarter of this year than during the first. 

On The Claire Byrne Show, Dermot Goode said there is a now “real concern” in the industry that a lot of their customers are “barely affording their health insurance”. 

“There is a real risk that a lot of them now might start exiting the market,” he explained. 

“We did see this before this trend where after multiple price increases, what we saw was a lot of younger members exiting the market.” 

Mr Goode continued that this phenomenon is “just bad for a community rated market”, which relies on young people to function profitably. 

“To keep it stable, you need a steady influx of younger members who basically will subsidise the older members,” he said. 

“So, we won't really know for maybe another six to nine months, but as like about one and a quarter million people will renew their cover from November right through to the end of February.

“There is a real risk now - this is what this data is telling us - that a lot of people look in terms of their affordability. 

“They're pretty much at a tipping point.”

Market response

Mr Goode added that certain insurance companies might react by offering a number of new, cut price options to their customers. 

“We've seen signs of that already; Level Health, the new entrant has reduced their rates,” he said. 

“We see VHI and Leia Healthcare have put deals in now for young families.

“Hopefully over the next three to four months, there will be more product coming in that will give those people who are really hard pressed to afford it right now, will give them some other options.

“If they don't, there will be a lot of people now who unless their company is going to pay it for them, they will probably have no option but to start exiting the market.”

Main image: A doctor with a patient. Picture by: Alamy.com