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Community rating in the absence of risk equalisation: lessons from the Irish private health insurance market

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  • Turner, Brian
  • Shinnick, Edward

Abstract

Ireland's private health insurance market operates on the basis of community rating, alongside open enrolment and lifetime cover. A risk equalisation scheme was introduced in 2003 to bolster community rating. However, in July 2008 the Irish Supreme Court set aside this scheme, on the basis of the interpretation of community rating in Irish legislation. This decision has significant implications for the Irish private health insurance market. This paper reviews the development of the market, focusing in particular on community rating. The breakdown of community rating in a market with multiple insurers with differing risk profiles is discussed. Applying this to the Irish market, it can be seen that the Irish Supreme Court judgment has significant implications for the application of community rating. Specifically, while community rating operates within plans, it no longer operates across the market, leading to high-risk lives paying more, on average, than low-risk lives. It has also led to greater opportunities for insurers to engage in market segmentation. This may have relevance for the design and operation of other community rated markets.

Suggested Citation

  • Turner, Brian & Shinnick, Edward, 2013. "Community rating in the absence of risk equalisation: lessons from the Irish private health insurance market," Health Economics, Policy and Law, Cambridge University Press, vol. 8(2), pages 209-224, April.
  • Handle: RePEc:cup:hecopl:v:8:y:2013:i:02:p:209-224_00
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    1. repec:eso:journl:v:48:y:2017:i:1:p:61-84 is not listed on IDEAS
    2. Conor Keegan & Conor Teljeur & Brian Turner & Steve Thomas, 2017. "Addressing Market Segmentation and Incentives for Risk Selection: How Well Does Risk Equalisation in the Irish Private Health Insurance Market Work?," The Economic and Social Review, Economic and Social Studies, vol. 48(1), pages 61-84.
    3. Conor Keegan & Conor Teljeur & Brian Turner & Steve Thomas, 2019. "Switching benefits and costs in the Irish health insurance market: an analysis of consumer surveys," International Journal of Health Economics and Management, Springer, vol. 19(1), pages 15-32, March.
    4. Conor Keegan & Conor Teljeur & Brian Turner & Steve Thomas, 2016. "Switching insurer in the Irish voluntary health insurance market: determinants, incentives, and risk equalization," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(7), pages 823-831, September.

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