Risk Equalisation - Maybe Car Insurance

dan nukem

Hi all,

I was wondering if somebody could explain something to me?
How is the risk equalisation scheme fair for us younger people?
Are we being punished for being healthy, and the first generation of non-alcoholic non-smokers?

I am covered by BUPA and i'm very dissapointed to see they will be leaving Ireland. The reason they are leaving of course is Risk Equalisation. BUPA would have to make 1million payments per week to VHI for their ineffiency. Obviously the only way to generate this money is to hand it over to the consumer.
BUPA have taken the moral high ground imo, and refused to be bullied by a greedy and incompetent government. Bertie is furious because somebody stood up to him, and nows he whinging in the media like a child throwing its toys about.

Risk Equalisation means , as I understand it, that in order for BUPA to remain profitable and remain in Ireland, their younger & healthier customers should be forced to pay higher premiums to cover the old folk who've spent the last 50 year smoking and drinking their way into higher premiums.

The older generation in this country have ALREADY made their money with the property boom while the new generation have taken it in the neck with the impossible house prices (yes, I STILL can't afford to buy!!)

Fair is fair, I am 24, if I have to pay for some old man's health charges, then he should be forced to hand over some money for my car insurance premium!

I have been waiting nearly 1.5 years at this stage to sit 1 driving exam in Cork City and I am still waiting! Only for the fact that Hibernian have the ignition for Provisional drivers, I would be paying E3000 per year.

I'm tired of our generation getting it in the neck 24/7, whens it gonna stop?

LostinBlanch

Well Dan if you don't like it, stick it to whoever you think is responsible at the next election, and get your frineds to do the same! You see as far as the govt is concerned older people vote in greater numbers than people your own age, so get the vote out and hurt them.

ziggy

This post has been deleted.

The_Minister

LostinBlanch wrote:

Well Dan if you don't like it, stick it to whoever you think is responsible at the next election, and get your frineds to do the same! You see as far as the govt is concerned older people vote in greater numbers than people your own age, so get the vote out and hurt them.

In fairness, no party opposes risk equalisation.
Labour love it, as do the Greens and Sinn Fein, Fine Gael would lose votes if it opposed it.
It's not an issue that you can vote on.

cyclopath2001

ziggy67 wrote:

If community rating is right/wrong in one insurance sector it should be right/wrong in the other.

That's debatable.

In health, people incur liability mostly through no fault of their own, from unavoidable disease or accidents. It is socially good for the young to subsidise the elderly. It is arguable, of course that smokers should not be subsidised.

In motoring, people incur liability through reckless behaviour. I can see no social justification for good drivers to subsidise bad ones.

Nuttzz

cyclopath2001 wrote:

In motoring, people incur liability through reckless behaviour. I can see no social justification for good drivers to subsidise bad ones.

I disagree with that, As a 21 year old i had to pay IRL£2000 for my first car insurance not because of my reckless behaviour but because I was 21, that fact that i have 10+ years NCB is reflected in my premium now but the reality is that people like me dont want to pay the same premium as the suped up MR2's with the "for sale" signs on them because we know that they are more likely to become a RSA statistic than the vast majority of safer drivers

mike65

Until insurers treat drivers as innocent until proven stupid the young will always pay through the nose regardless of thier own driving ability/common sense.

Mike.

cyclopath2001

Nuttzz wrote:

I disagree with that, As a 21 year old i had to pay IRL£2000 for my first car insurance not because of my reckless behaviour but because I was 21, that fact that i have 10+ years NCB is reflected in my premium now but the reality is that people like me dont want to pay the same premium as the suped up MR2's with the "for sale" signs on them because we know that they are more likely to become a RSA statistic than the vast majority of safer drivers

But isn't the problem that the insurance companies have not found a better way to distinguish between high-risk drivers and low risk ones?

Hotblack Desiato

cyclopath2001 wrote:

But isn't the problem that the insurance companies have not found a better way to distinguish between high-risk drivers and low risk ones?

The real problem is the completely broken driver training and testing system

IF passing your test actually meant something (our test is waay too easy tbh)
and IF it could be taken within a reasonable length of time from starting to drive
and IF no unaccompanied learner driving was allowed
and IF all instructors were qualified and regulated and had to certify you as competent before sitting the test
and IF a probationary period were introduced for new licence holders, with 2 offences = a ban and start again at the beginning thanks very much
and IF Garda enforcement was not a game to issue as many tickets as possible, regardless of the low risk caused by most of those offences

then the insurers could be pretty sure that the worst of the clueless would be weeded out by the system.

Of course nothing like the sort exists, so pretty much all they've got to go on is NCB, gender, age. (Choice of car reflects your budget not your driving ability, some of the very worst driving is done in the very cheapest cars...)

cyclopath2001

ninja900 wrote:

then the insurers could be pretty sure that the worst of the clueless would be weeded out by the system.

One insurance company introduced discounts for young drivers who accepted to be monitored using GPS technology.

jhegarty

cyclopath2001 wrote:

One insurance company introduced discounts for young drivers who accepted to be monitored using GPS technology.

would you make weekly checkups mandatory for older people who want cheap health insurance ?

is_that_so

Although the cost for some young drivers are exhorbitant, companies do offer those drivers an opportunity to prove they are less of a risk by signing up to the various incentive schemes already mentioned. And that is risk equalisation. You pay less when they trust you to drive without creating a risk.

Otherwise how are they going to know? They'll just look at statistics. if you are in the high risk category then no amount of promising to be a good boy will do. You have to prove it.

If a health insurance company wants to assess your risk they can send you to a doctor. Health insurance also has a tendency to increase whereas car insurance should not under ideal circumstances.

cyclopath2001

jhegarty wrote:

would you make weekly checkups mandatory for older people who want cheap health insurance ?

That would go against the concept of community loading.

Driver's liability is caused by driver's behaviour.

Illness is different.

Alun

jhegarty wrote:

would you make weekly checkups mandatory for older people who want cheap health insurance ?

Actually that might be not quite such a stupid an idea as you suggest .. not weekly, of course, but certainly regular check-ups, say every 6 months. The theory being that if you catch certain conditions early enough they'd be easier, and therefore possibly cheaper, to treat.

Alun

cyclopath2001 wrote:

Driver's liability is caused by driver's behaviour.

Illness is different.

Not necessarily .. people's behaviour can affect their susceptibility to, and the success of treatment of some illnesses quite dramatically.

Gurgle

Alun wrote:

Not necessarily .. people's behaviour can affect their susceptibility to, and the success of treatment of some illnesses quite dramatically.

Safety of a driver is entirely down to their behaviour.
While lifestyle does have an effect, you can't say the same about health.

If community loading were taken away, then at 70 you would be looking at more than €8k per year for health insurance. As you get older it would only go up.

Most older people would be unable to pay it - after a lifetime of paying health insurance when you statistically probably didn't need it you would be kicked into the hell of the public health system.

Or theres the other option, as in the US - limited cover. You can pay for health insurance for 40 years, then you get cancer at 60.

Watch your treatment hit the limit in a matter of months, then you either take option a)pay the costs of treatment yourself, sell your house and let the costs eat away everything you own or option b) die.

Conar

Gurgle wrote:

Safety of a driver is entirely down to their behaviour.
While lifestyle does have an effect, you can't say the same about health.

If community loading were taken away, then at 70 you would be looking at more than €8k per year for health insurance. As you get older it would only go up.

Most older people would be unable to pay it - after a lifetime of paying health insurance when you statistically probably didn't need it you would be kicked into the hell of the public health system.

Or theres the other option, as in the US - limited cover. You can pay for health insurance for 40 years, then you get cancer at 60.

Watch your treatment hit the limit in a matter of months, then you either take option a)pay the costs of treatment yourself, sell your house and let the costs eat away everything you own or option b) die.

Surely that doesn't reflect anything that could happen in our health system.
Health insurance simply means better treatment, but you will still always be treated in the public wards.

Gurgle

Conar wrote:

Surely that doesn't reflect anything that could happen in our health system.
Health insurance simply means better treatment, but you will still always be treated in the public wards.

I have no idea of the statistics for how many people over 60 have health insurance, but the public health system is failing at present. If everyone over 60 were reliant on it, it would come tumbling down. Providing the neccessary treatment to everyone over 60 would require a massive increase in funding.

Bottom line - instead of paying for it through community loading, we'd be paying for it through PAYE. Meanwhile health insurance companies make a killing by pricing the high risk population out of the industry.

When all the numbers are added up, healthcare in the country would cost more - by an amount at least equal to the insurance companies' profit margin.

Conar

Gurgle wrote:

I have no idea of the statistics for how many people over 60 have health insurance, but the public health system is failing at present. If everyone over 60 were reliant on it, it would come tumbling down. Providing the neccessary treatment to everyone over 60 would require a massive increase in funding.

Bottom line - instead of paying for it through community loading, we'd be paying for it through PAYE. Meanwhile health insurance companies make a killing by pricing the high risk population out of the industry.

When all the numbers are added up, healthcare in the country would cost more - by an amount at least equal to the insurance companies' profit margin.

Valid points.
Whatever the way forward though I think we need to start looking after the elderly.
I was in the out-patients department in James Connolly a few months back and I felt really sorry for the large percentage of old people that were either left in what can only be described as industrial looking wheelchairs, or using the regular seating when they obviously were not the least bit comfortable.

I think that risk equalisation could work, but I also think that VHI should be privatised and adhere to the same rules as others. This might create some kind of level playing field and would incentivise other health insurance providers to join the market and take on older clients.

The situation at the moment seems like a step backwards to me.


***EDIT***
Sorry for drifting off topic OP.

cyclopath2001

Alun wrote:

Not necessarily .. people's behaviour can affect their susceptibility to, and the success of treatment of some illnesses quite dramatically.

Agreed, but we're 'comparing apples and oranges'.

For the most part, motorist liability derives from their own risk-taking behaviour, whereas, in health, a substantial amount of the liability stems from factors outside of a person's control. There is some sense in health insurance including preventative measures but, weekly checks would be excessive.

SeanW

Not necessarily - ypu pay for car insurance based on the liability of your demographic group as a whole, very little to do with the person themselves as a driver - the proverbial boy scout pays similar insurance to the boy racer. It's similar with health insurance - ones health and therefore health liability has much to do with their age group etc. Only with health insurance there's now "risk equalisation" which basically means younger people subsidise the older (I have no problem with that in theory, but I don't like the mechanism) but are still being screwed over with car insurance.

Community rating/Risk equlisation is nothing more than a stealth tax on young people.

cyclopath2001

SeanW wrote:

Not necessarily - ypu pay for car insurance based on the liability of your demographic group as a whole, very little to do with the person themselves as a driver - the proverbial boy scout pays similar insurance to the boy racer.

But what about the 'no claims bonus' and loadings for people with endorsements and penalty points?

If motor insurance is based on demographics it's because it's convenient to it this way. Drivers have been offered reductions based on GPS tracking which would help them prove they were responsible in their behaviour, but the scheme has not proven popular.

Taken to an extreme, if insurance companies had control over driver testing and GPS tracking data, they'd be able to calculate risk more precisely. That they do not do so is because the public would resist it. It's not because of any commitment to community rating for motor insurance.

It's one thing, in health insurance, accepting community rating where the young and healthy subsidise the elderly and unfortunate, especially when we could all pass from one state to another. Health insurance is optional, if you don't want to participate, you can carry the risk yourself.

It's quite different to insist that careful drivers should subsidise dangerous drivers.

SeanW

It's very much similar. I do not expect that older drivers or otherwise "good" drivers should subsidise younger drivers - if younger drivers as a group incur more risk then that's how it goes - I have no doubt some older, better driver on a limited income could be forced off the road if they had to cross subsidise others in a community risk scheme.

But the reverse applies as well - I am sure there are some young people on low incomes who will not be able to afford health cover because their premiums will be loaded with cross subsidisation of higher risk customers.

I don't disagree with the idea of younger people partly paying for the needs of the older generation, I consider this to be a fundamental part of civilised society, but I think it should be done on an ability-to-pay basis instead of what is effectively a regressive stealth tax.

The government could have used tax revenues to fund this scheme (instead of reducing the top tax rate AGAIN) instead of screwing over young people who are already getting soaked in other parts of the insurance market.

cyclopath2001

SeanW wrote:

But the reverse applies as well - I am sure there are some young people on low incomes who will not be able to afford health cover because their premiums will be loaded with cross subsidisation of higher risk customers.

All insurance is about spreading risk.

dan nukem

Pat McCarthy is 24, he graduated from a computer science degree 2 years ago, he has 2 jobs and he works on average 60hours per week.
He doesn't drink or smoke and he exercises 4days per week. He earn less than E30,000 per year.
Of his second job in the evening, for every 2 shifts he does, 2 are essentially done for free because of tax (paying for the costs of some person who is too lazy to get a job, or paying to hold prisoner in Clover Hill etc.)
He has a GF, would like to get married but has to save his money. He would like to get a mortgage but has to struggle to save the Stamp Duty(which the government have admitted they don't need). Luckily, he doesn't live in Dublin as he would not be able to afford to rent and would have to live at home like his friend Tom does.
He pays higher car insurance than a lot of people because the government are unable to provide him with a driving exam so he will be waiting and paying higher premiums for a while yet, despite the fact that he had to pay a few hundred euro to sit 10 driving lessons/theory tests.
He also has to pay council charges, refuse charges, tv license charges(even though he has not time to watch the bloody thing) and a whole host of other charges. He also loses even more of his salary because he has a private pension to operate.
He knows there is an economic boom in the country because he sees a lot of 50 year olds who have high salaries driving big Mercedes.
He has an ECO friendly car because he wants to do his bit for the enviornment but the government don't seem to care, he still pays the same road tax as anyone else.
On the bright side, he only sits in traffic for 1hour per day, unlike his friend Tom in dublin who spends about 3hours per day.
He is not in debt yet, but he is essentially trapped and praying for crash in the property market.
He is dissapointed with the government even though he voted for them in the last election. He has yet to see any affordable houses being built anywhere.
He has his health cover with BUPA and has been very pleased with them but is saddened to hear that the government have tried to extort money from them and they will be forced to leave Ireland because they're unwilling to fine young people for looking after themselves.
It reminds him of the situation with SMART telecom and Eircom.

Paddy O Malley is 60 odd, left school after his intercert, never went to college, worked 1 job for most of his life doing about 35 hours per week, smoked 20fags a day, drank every weekend and rarely exercised if at all, having full irish breakfasts instead of a healthy diet to top it off.
He made a serious profit during the economic boom, as the value of his house increased substantially, he also lets his aunt's house which he inherited years ago for a tidy profit. With some of the equity, he bought up a couple of other properties around which he lets, and plans to give one to his daughter in a few years because she doesn't like having a 9-5, once the polish couple renting the house having finished paying the mortgage.
He had a driving test about 6 weeks after the first time he sat into a car and he passed the test because the tester was a brother of his second cousin once removed. He got his daughter a test in 3weeks because he slipped a few hundred to the local TD who sorted it out. He pays her insurance for her which is minimal because she is 26 and female, even though shes actually never driven on a motorway yet.
He gets a pension from the government and has lot of subsidies, sometimes he takes the luas to go around and visit his properties.
He has a very nice 2Litre BMW which he imported from Germany and he doesn't pay much for the insurance because of his age group, even though hes been known to drink drive the odd time, especially at the weekend after hes played a few rounds of golf.
Hes glad to hear that the government are finally sorting out the mess of a health insurance system by strangling that evil BUPA company because obviously they are not 'playing fair' by having younger customers and providing an excellent alternative to the VHI. Its good for society to pay for their elders - after all there would be no economic boom if it hadnt' been for his generation.
He is annoyed that some people thinks he is being greedy, he worked all his life!

dan nukem

Pat McCarthy is 24, he graduated from a computer science degree 2 years ago, he has 2 jobs and he works on average 60hours per week.
He doesn't drink or smoke and he exercises 4days per week. He earn less than E30,000 per year.
Of his second job in the evening, for every 2 shifts he does, 2 are essentially done for free because of tax (paying for the costs of some person who is too lazy to get a job, or paying to hold prisoner in Clover Hill etc.)
He has a GF, would like to get married but has to save his money. He would like to get a mortgage but has to struggle to save the Stamp Duty(which the government have admitted they don't need). Luckily, he doesn't live in Dublin as he would not be able to afford to rent and would have to live at home like his friend Tom does.
He pays higher car insurance than a lot of people because the government are unable to provide him with a driving exam so he will be waiting and paying higher premiums for a while yet, despite the fact that he had to pay a few hundred euro to sit 10 driving lessons/theory tests.
He also has to pay council charges, refuse charges, tv license charges(even though he has not time to watch the bloody thing) and a whole host of other charges. He also loses even more of his salary because he has a private pension to operate.
He knows there is an economic boom in the country because he sees a lot of 50 year olds who have high salaries driving big Mercedes.
He has an ECO friendly car because he wants to do his bit for the enviornment but the government don't seem to care, he still pays the same road tax as anyone else.
On the bright side, he only sits in traffic for 1hour per day, unlike his friend Tom in dublin who spends about 3hours per day.
He is not in debt yet, but he is essentially trapped and praying for crash in the property market.
He is dissapointed with the government even though he voted for them in the last election. He has yet to see any affordable houses being built anywhere.
He has his health cover with BUPA and has been very pleased with them but is saddened to hear that the government have tried to extort money from them and they will be forced to leave Ireland because they're unwilling to fine young people for looking after themselves.
It reminds him of the situation with SMART telecom and Eircom.

Paddy O Malley is 60 odd, left school after his intercert, never went to college, worked 1 job for most of his life doing about 35 hours per week, smoked 20fags a day, drank every weekend and rarely exercised if at all, having full irish breakfasts instead of a healthy diet to top it off.
He made a serious profit during the economic boom, as the value of his house increased substantially, he also lets his aunt's house which he inherited years ago for a tidy profit. With some of the equity, he bought up a couple of other properties around which he lets, and plans to give one to his daughter in a few years because she doesn't like having a 9-5, once the polish couple renting the house having finished paying the mortgage.
He had a driving test about 6 weeks after the first time he sat into a car and he passed the test because the tester was a brother of his second cousin once removed. He got his daughter a test in 3weeks because he slipped a few hundred to the local TD who sorted it out. He pays her insurance for her which is minimal because she is 26 and female, even though shes actually never driven on a motorway yet.
He gets a pension from the government and has lot of subsidies, sometimes he takes the luas to go around and visit his properties.
He has a very nice 2Litre BMW which he imported from Germany and he doesn't pay much for the insurance because of his age group, even though hes been known to drink drive the odd time, especially at the weekend after hes played a few rounds of golf.
Hes glad to hear that the government are finally sorting out the mess of a health insurance system by strangling that evil BUPA company because obviously they are not 'playing fair' by having younger customers and providing an excellent alternative to the VHI. Its good for society to pay for their elders - after all there would be no economic boom if it hadnt' been for his generation.
He is annoyed that some people thinks he is being greedy, he worked all his life!

piraka

Hey what about Joe Bloggs in his forties, who lived through the eighties but didn't emigrant and now is stuck in a middle managenent job working 16 hrs days with a working wife and 4 kids and watching his buddies die of heart attacks all around him due to stress. Has a house that worth something if he sells but he can't.

Rebeller

For all those who object (which I do not) to risk equalisation and community rating do you also have a problem with a PAYE taxation system

Any taxation system is essentially about one group subsidising another.

Theoretically, those on higher incomes pay a higher share of tax so that those on low incomes can access universal services such as health, public transport. Risk equalisation (in theory) is based on the same idea (i.e. making a service affordable to all by asking those who can afford it to pay a contribution)

While risk equalisation is a good idea in principle I fear that the government has an ulterior motive. Anytime I hear Bertie the bollix expressing a definite opinion and referring to private companies as "screwing" people (as he recently did when talking about BUPA) I get nervous and begin to look for the real reasoning behind the decision.

The PDs and Fianna Fail are no friend of the ordinary low to middle income PAYE worker. For them to introduce a scheme that seems to actually promote equality suggests that they all is not as it seems.

It's seems certain that VHI will be privatised within the coming years. That fact, tied into this government's stated policy of subsidising the development of private hospitals on public hospital sites suggests that the real winner in risk equalisation will be those in the private healthcare business (including a number of our leading Mahon Tribunal cowboy builder friends) who just so happen to be major "contributors" the the FF slush fund/

dan nukem

Rebeller wrote:

Theoretically, those on higher incomes pay a higher share of tax so that those on low incomes can access universal services such as health, public transport. Risk equalisation (in theory) is based on the same idea (i.e. making a service affordable to all by asking those who can afford it to pay a contribution)

I admit that I do not have an in-depth understanding of Risk Equalisation, I only know what I've heard from my HR and what I've read in the papers, however, while the above point is true regarding taxation i.e. the person earning more pays more tax - it seems to be that there is a reversal of roles with Risk Equalisation.
That being that the younger person pays more consequently paying a higher percentage of their wage than the older person is paying.

Read that last sentence again - how is that equalisation!?

That is of course based on the assumption that people in the workforce 30 years earn more than a college graduate which I'm sure most people would agree is a reasonable assumption.

seamus

There are no votes in doing things that directly affect young people. It's really that simple. Demographically, they have the smallest turnout. Do things which affect people's children and older people themselves, and you get the highest number of votes.

Gurgle

dan nukem wrote:

He made a serious profit during the economic boom, as the value of his house increased substantially, he also lets his aunt's house which he inherited years ago for a tidy profit. With some of the equity, he bought up a couple of other properties around which he lets

Thats your impression of the average 60-odd year old's financial situation?

Have you ever actually met anyone over 40?

seamus

dan nukem wrote:

Pat McCarthy is 24, he graduated from a computer science degree 2 years ago, he has 2 jobs and he works on average 60hours per week.
He doesn't drink or smoke and he exercises 4days per week. He earn less than E30,000 per year.
Of his second job in the evening, for every 2 shifts he does, 2 are essentially done for free because of tax (paying for the costs of some person who is too lazy to get a job, or paying to hold prisoner in Clover Hill etc.)
He has a GF, would like to get married but has to save his money. He would like to get a mortgage but has to struggle to save the Stamp Duty(which the government have admitted they don't need). Luckily, he doesn't live in Dublin as he would not be able to afford to rent and would have to live at home like his friend Tom does.
He pays higher car insurance than a lot of people because the government are unable to provide him with a driving exam so he will be waiting and paying higher premiums for a while yet, despite the fact that he had to pay a few hundred euro to sit 10 driving lessons/theory tests.
He also has to pay council charges, refuse charges, tv license charges(even though he has not time to watch the bloody thing) and a whole host of other charges. He also loses even more of his salary because he has a private pension to operate.
He knows there is an economic boom in the country because he sees a lot of 50 year olds who have high salaries driving big Mercedes.
He has an ECO friendly car because he wants to do his bit for the enviornment but the government don't seem to care, he still pays the same road tax as anyone else.
On the bright side, he only sits in traffic for 1hour per day, unlike his friend Tom in dublin who spends about 3hours per day.
He is not in debt yet, but he is essentially trapped and praying for crash in the property market.
He is dissapointed with the government even though he voted for them in the last election. He has yet to see any affordable houses being built anywhere.
He has his health cover with BUPA and has been very pleased with them but is saddened to hear that the government have tried to extort money from them and they will be forced to leave Ireland because they're unwilling to fine young people for looking after themselves.
It reminds him of the situation with SMART telecom and Eircom.

Sounds like Pat is a bit of an unmotivated bugger. Degree and two jobs, and not pulling down more than €30k? He must be doing less than 40 hours a week or so in total. Most of the rest of us do that with one job. Never done a driving test, yet he's 24? Not living in Dublin and paying a high premium at 24? Maybe his car is too big. He should be able to get something at well under a grand.

There's no point in trying to pull in marginal cases to make an argument. Most people at 60 don't have multiple houses, huge pensions and nothing to do. Most of them have *a* house, a government pension waiting for them, and still work the same 37-43 hour week that the rest of us do.
Most people at 24 aren't struggling to survive. They may not necessarily have their own homes, but they have plenty of disposable cash to spend on laptops, phones, car loans, big tvs, mp3 players, and still have change to go out and get lathered at the weekend.

shoegirl

ziggy67 wrote:

OP i think from what you say it isn't so much risk equalisation (companies compensating each other for higher payout risk) that you are against rather it is community rating (all customers paying the equal ammount regardless of circumstance) that you have a problem with.

TBH i don't blame you, young people are getting it in the ass 2 ways from paying higher car insurance and then having to pay equal health insurance.

If community rating is right/wrong in one insurance sector it should be right/wrong in the other.

Apparently "risk equalisation" exists to "protect" the community rating.

Of course the question remains, if risk equalisation was not necessary before competitors entered the market then why is it necessary now? Has it been proven beyond reasonable doubt that the new entrants have "taken away" fresh young business from VHI? I'm not sure. Surely any company which has a 40 year headstart in the market is going to initially have an older customer base, but this will decline as the market matures.

Only Sean Barrett has pointed out that VHI already "subsidises" its loss making, more expensive plans (C-E) with the cheaper basic plans. So he concludes, than effectively, those on BUPA's equally cheaper plans will also effectively be involved in transferring cash to subsidise the more expensive loss making plans. Not to mention "closed" plans such as the Gardai, ESB and Prison Officers who in most cases on average earn nearly twice the average industrial wage.

In my opinion BUPA argued their case badly, but they are not wrong to withdraw. If you cannot make ends meet in the market, then its time to pull out. It was obvious to me when BUPA sold its interest in the Blackrock Clinic that it was starting a retreat from the irish market. I can't say I blame them, or any other company thats found it impossible to compete with a state backed player.

shoegirl

seamus wrote:

Sounds like Pat is a bit of an unmotivated bugger. Degree and two jobs, and not pulling down more than €30k? He must be doing less than 40 hours a week or so in total. Most of the rest of us do that with one job. Never done a driving test, yet he's 24? Not living in Dublin and paying a high premium at 24? Maybe his car is too big. He should be able to get something at well under a grand.

....
Most people at 24 aren't struggling to survive. They may not necessarily have their own homes, but they have plenty of disposable cash to spend on laptops, phones, car loans, big tvs, mp3 players, and still have change to go out and get lathered at the weekend.

Chances are if he has a degree he's probably only 2-3 years in a job, and since he did IT he probably ended up in a very dead end "entry level" position which will never afford pay rises of more than 4-5% per annum, despite a very small starting salary. I know literally dozens of former colleagues, the vast majority with degrees, who don't even come near to 30k.

If he didn't start to drive until later it would partially explain why his premium is so high. I couldn't afford to learn to drive until I was 25, so my first years premium was 1000 pounds (about 1270 euros). Guys I knew who were older were being quoted as much as 3200 POUNDS at the time, on a salary of around 15-18k pa.

Its bullSH** to suggest that everybody aged 24 is rolling in money. Not if you come from a relatively less well off background and have to help out at home you're not. When I was living at home we all were expected to contribute 20% of our after tax salaries to help run the family home. Adding to that a car loan and running a car left us with not a lot left - and that was on what was at the time an above average wage. It is true however that the converse goes for the 60 somethings - not all are well off. A lot of people I know in their 60s are crippled because they remortgaged a few times along the way for a variety of reasons and so many are cash poor. Also a lot haven't had very big pay rises (if outside the public sector) so wouldn't have huge money to blow.

Lucky you if you are better off than the cases mentioned, but a lot of well-qualified people are caught in low wage spirals - especially in industrial and IT jobs.

Byrno

shoegirl wrote:

Of course the question remains, if risk equalisation was not necessary before competitors entered the market then why is it necessary now?

Risk equalisation was not necessary before competitors entered the market because before that VHI were the only private health insurance provider. Risk Equalisation is between competitors. If there is a monopoly there is no reason for it.

OT - The way Community Rating works is that when you are young, you pay a higher premium so that when you are older you don't have to pay as much as you would otherwise. People now in their 50s, 60s, 70s etc. subsidised the older generations when they were younger so that when they got to this stage they wouldn't have to pay as much. Now you want to take that away. Equitable? I don't think so anyway.

Risk Equalisation is stupid in Car Insurance. If I have a No Claims Bonus of over 5 years I don't want to pay as much as someone who has 2 crashes a year. That is what it would mean.

However I do agree that age is a very arbitrary way of formulating Driver Risk. Just because I'm 22 doesn't necessarily mean that I'll be a bad driver. Just because you are 60 doesn't mean that you are in poor health.

seamus

shoegirl wrote:

Chances are if he has a degree he's probably only 2-3 years in a job, and since he did IT he probably ended up in a very dead end "entry level" position which will never afford pay rises of more than 4-5% per annum, despite a very small starting salary. I know literally dozens of former colleagues, the vast majority with degrees, who don't even come near to 30k.

Yes, but how many of them work a second job and still earn less than €30k? Even a part-time job should be netting €9k per year at a minimum, and if you're not pulling in over €30k (before tax) at that point, then you have one or two jobs that you need to change.

Its bullSH** to suggest that everybody aged 24 is rolling in money.

I didn't. But I haven't heard of any 20-somethings with degrees who are living on the breadline, regardless of background.

To give you an idea of where my view is coming from, I'm 24, 3 years out of college *and* working in I.T. So I'm not talking out of my arse here

ninty9er

dan nukem wrote:

The reason they are leaving of course is Risk Equalisation. BUPA would have to make 1million payments per week to VHI for their ineffiency. Obviously the only way to generate this money is to hand it over to the consumer.

Sorry if it's already been said, but the reason for this is because BUPA have been cleaning up for the last 10 years while VHI have been running losses. IT is not €1million every day for the next year. Adjusted it is €100,000 per day or 300 million odd over ten years.

BUPA knew this was on the cards when they came here and if they can't deal with it now, let them go crying to mammy...Vivas will jsut fill the void. BUPA feel that Ireland can't live without them and it's about time a government stood firm instead of caving in

ninty9er

seamus wrote:

Yes, but how many of them work a second job and still earn less than €30k? Even a part-time job should be netting €9k per year at a minimum, and if you're not pulling in over €30k (before tax) at that point, then you have one or two jobs that you need to change.

I'm 20 in college and have a part time job, so I can vouch that a summer of work and 45-47 weekends a year will net around 9k, however I'm headed for accounting and entry salary is 12 k so 30k is a bit optimistic at 23-24, but definately by 30 €40k should be the target. Pahrmacists etc would be on 100k by 30, but thats the exception rather than the rule

SeanW

So you accept that this is nothing more than a regressive stealth tax on young people who cannot always afford it?

Gurgle

SeanW wrote:

So you accept that this is nothing more than a regressive stealth tax on young people who cannot always afford it?

Health insurance is voluntary.

If old people had to pay much more than young people, there would be more old people relying on the public health system.

This would require lots more money to run.

This money would come from tax.

Tax is not voluntary.

seamus

Gurgle wrote:

Health insurance is voluntary.

So then why is the Government going to such pains to protect people's access to this insurance?

Surely if, shock horror, we had a decent public health service in this country, then health insurance would only be for those who require five-star hospital service. As it is, health insurance is a requirement for anyone who wants access to anything resembling a first-world health service. This is why the Government is so hell-bent on protecting it. If suddenly a large number of those over 55 were forced to go public, the real shambles of the health service would then become an electorate issue.

Be under no illusions, FF & the PDs have never had any interest other than protecting their votes.

Gurgle

seamus wrote:

So then why is the Government going to such pains to protect people's access to this insurance?

Money money money.
If we spend it, they don't have to.

seamus wrote:

Surely if, shock horror, we had a decent public health service in this country, then health insurance would only be for those who require five-star hospital service. As it is, health insurance is a requirement for anyone who wants access to anything resembling a first-world health service.

Every trip I've ever made to hospital has been related to falling off something, ranging from a motorbike to a roof. I've had VHI cover for my whole life and never used it.
At 60 I expect to be making more trips due to internal organs approaching their use-by date. Less urgent, more expensive to treat. Thats when I expect to be cashing in on a lifetime of paying health insurance.
Everyone needs more medical treatment in their 60s than in their 20s. Its beyond statistics. Medical treatment is expensive, I'd rather pay for it over my whole life than have to produce the money on the day I need it.

The absence of community loading and by extension risk equalization would mean I would have been paying for nothing through my fit & healthy decades.

seamus wrote:

This is why the Government is so hell-bent on protecting it. If suddenly a large number of those over 55 were forced to go public, the real shambles of the health service would then become an electorate issue.

Be under no illusions, FF & the PDs have never had any interest other than protecting their votes.

I would like to believe that the high court decision was not politically motivated.

tbh, if the government were to have their way, risk equalization would never have gone through and they would be making a huge fuss about how they had encouraged competition and provided cheaper health insurance.

seamus

Gurgle wrote:

Medical treatment is expensive, I'd rather pay for it over my whole life than have to produce the money on the day I need it.

Well, me too. Except that I'd prefer to know that *anyone* can get access to the medical treatment that they need, and only those that really want to can go the private route.

I'd rather pay €450 a year in tax to know that when I'm 65, the facilities will be there for me, for free, rather than pay a private company the same money and take a gamble on whether they will or will not pay my medical expenses depending on what has happened to me.

Car insurance is *mandatory*. Surely risk equalisation in this sector makes more sense? I'd rather that younger drivers defer the cost of their first few driving years up to their later years, when they will have the money to afford a slightly higher premium. Of course, drivers would need proper education, but that's a different thread altogether.

Gurgle

seamus wrote:

Car insurance is *mandatory*. Surely risk equalisation in this sector makes more sense? I'd rather that younger drivers defer the cost of their first few driving years up to their later years, when they will have the money to afford a slightly higher premium. Of course, drivers would need proper education, but that's a different thread altogether.

But to compare the two:

Driving - you start out as a learner, getting better as you get more practise. You can reduce by 95% your risk of causing an accident by the way you drive, the attention you pay to what you are doing, keeping your speed reasonable, not driving drunk etc. You can go a lifetime without ever having a claim against your insurance, or it can all go wrong - one mistake can lead to a payout of more than the total you spent in your life on car insurance.

Health - You start out healthy, statistically becoming more and more likely to need more and more medical treatment as you get older, say from 50 on. If you reach 90, you will almost definitely need more medical treatment in an average year than the €1000 or so you pay for health insurance will cover. The deterioration in your health can be accelerated by lifestyle but it will happen eventually no matter how healthily you live. You cannot control this process, it happens to everyone.

mayhem#

With all the discussion on risk equalisation I still have not seen a single attempt at a logical explanation for it.
Honestly, I am not taking the piss. If it is so much better can someone please explain the benefits to me?

E.

is_that_so

"Risk equalisation is a process that aims to equitably neutralise differences in insurers’ costs due to variations in the health status of their members. Risk equalisation results in cash transfers from insurers with lower risk members to insurers with higher risk members."

HIA

mayhem#

I know what the definition is (I'm not completely stooopid) it's just that I do not understand the logic behind it...

E.

is_that_so

mayhem# wrote:

I know what the definition is (I'm not completely stooopid) it's just that I do not understand the logic behind it...

E.

In a fully "free" market companies could cherry pick - for example only people in their 20s or 30s who are deemed low risk and therefore more profitable. Risk equalisation is designed to discourage that and level the playing field for all health insurance companies.

mayhem#

is_that_so wrote:

In a fully "free" market companies could cherry pick - for example only people in their 20s or 30s who are deemed low risk and therefore more profitable. Risk equalisation is designed to discourage that and level the playing field for all health insurance companies.

No it's not.
It's an unashamed attempt by the governement to interfere in what should have been a free market.
At no point has it been made clear how the consumer benefits from this.

E.

is_that_so

mayhem# wrote:

No it's not.
It's an unashamed attempt by the governement to interfere in what should have been a free market.
At no point has it been made clear how the consumer benefits from this.

E.

Depends whether a consumer is 30 or 60.

mayhem#

is_that_so wrote:

Depends whether a consumer is 30 or 60.

Really?
Is anyone paying a lower premium or getting better cover now that risk equalisation has been rammed down Bupa's throat?

E.