Health insurance for my elderly Parents?

dublinario

Hello All,

My parents are pushing 70, and have never had private health insurance. The older they grow, the more I worry for them. My dad is struggling with an as-yet undiagnosed ailment, but received an appointment for a necessary test that is scheduled for nearly a year from now. I'm in my 30s and would be infuriated by such a wait. But to a 70 year old, the stakes can be higher than mere infuriation...

Would anybody have any advice for trying to get a near-70s couple into private health insurance for the first time? Most amenable provider? Pitfalls with relation to what is (as you can imagine, age-wise) a decent assortment of pre-existing ailments?

All steers, warmly appreciated,

Thanks,
Dub

dublinario

...holy sh*t, I think I've answered my own question. The waiting periods advertised on the HIA website are punitive towards over 65s. They won't cover a newly-arising illness for 2 years after policy commencement, and won't touch a pre-existing illness for 10 years!

The 2 years is harsh, but I was half-expecting something in that ballpark. But the 10?

hmmm

dublinario wrote: »

The 2 years is harsh, but I was half-expecting something in that ballpark. But the 10?

Older people are vastly more expensive than young people for healthcare costs. If people can opt out of the system when they are younger & healthier, and decide to pay only when they're older, or worse, when they're ill, health insurance companies would never be able to survive.

Sorry, but that's the way it goes. Someone else might be able to suggest some way of shortcutting the system.

dublinario

hmmm wrote: »

Older people are vastly more expensive than young people for healthcare costs. If people can opt out of the system when they are younger & healthier, and decide to pay only when they're older, or worse, when they're ill, health insurance companies would never be able to survive.

Sorry, but that's the way it goes. Someone else might be able to suggest some way of shortcutting the system.

Thanks for the reply, but you are being assumptive about underlying circumstances. 'Opt out' suggests a choice. There was never a time in their lives when my parents could have afforded private health care. They still can't, but I'm exploring whether I could buy it for them.

Furthermore, I'm not naive about the economics. But I'm confused by Risk Equalization's role in all this. If premiums are evened out across different risk profiles, but you still can't access any benefits, what's the point?

hmmm

dublinario wrote: »

Thanks for the reply, but you are being assumptive about underlying circumstances. 'Opt out' suggests a choice.

I made no assumptions.

But I'm confused by Risk Equalization's role in all this. If premiums are evened out across different risk profiles, but you still can't access any benefits, what's the point?

Risk equalisation is not trying to cover pre-existing conditions as that would lead to an impossible situation - it'd be like allowing people to purchase retrospective car insurance after they've been in a crash.

dublinario

hmmm wrote: »

I made no assumptions.

Well, you said...

hmmm wrote: »

If people can opt out of the system when they are younger & healthier, and decide to pay only when they're older...

I acknowledge that you weren't assuming anything about my specifics, but you hypothesised an ala carte attitude towards private health care that doesn't apply to my parents. That is all I was clarifying.

hmmm wrote: »

Risk equalisation is not trying to cover pre-existing conditions as that would lead to an impossible situation - it'd be like allowing people to purchase retrospective car insurance after they've been in a crash.

You are being far too black and white. Demonstrably, providers do accept people of all ages and pre-existing illnesses, and will eventually begin covering those pre-existing illnesses. So this is not a matter of 'will they/won't they'. It is a sliding scale, and I don't object to that. I am suggesting that the slider is 'slid' too far to one side (i.e. 10 year waiting period).

Differently put, I believe you are naive to think that because the period is set at 10 years, it is the best the insurance industry could have possibly done for elderly customers, or that (for example) 5 years would have rendered the model unprofitable. That perspective is very binary, and trusting...

hmmm

dublinario wrote: »

Differently put, I believe you are naive to think that because the period is set at 10 years, it is the best the insurance industry could have possibly done for elderly customers, or that (for example) 5 years would have rendered the model unprofitable. That perspective is very binary, and trusting...

Health insurance providers are barely profitable, so if you'd prefer a model with shorter waiting periods you would need to make up the deficit somewhere else.

dublinario

hmmm wrote: »

Health insurance providers are barely profitable, so if you'd prefer a model with shorter waiting periods you would need to make up the deficit somewhere else.

Fair enough Hmmm, I do accept the point you're making, though I maintain a scepticism about whether more could be done by the insurance industry for the over 65s (and I'm sceptical about competition when it comes to insurance generally).

I appreciate you replying to the thread.

AlexisM

dublinario wrote: »

I'm confused by Risk Equalization's role in all this. If premiums are evened out across different risk profiles, but you still can't access any benefits, what's the point?

I think maybe you are referring to community rating here? Risk equalization's role is to even things out between insurance companies who are forced to apply community rating - so if VHI has all the over-70s and Aviva only has under-40s, risk equalization would transfer money from Aviva to VHI to make up for that fact. Community rating is where everyone is charged the same regardless of risk profile.

dublinario wrote: »

I maintain a scepticism about whether more could be done by the insurance industry for the over 65s

Health insurers lose massive amounts on over 65s - even with long waiting periods. For insurers to 'do something' for over-65s, they would have to increase premiums across the board - including for the younger folk who are already paying in more than they get out each year.

A big incentive to join early is to NOT face a long waiting period at a time when you might actually need cover. Remove the incentive, and more people will just wait to join when they reach the age when health insurance pays out more on average than the premium paid over.

Medical costs are massively skewed towards end-of-life. The reality is that even with waiting periods, insurers won't take in enough from people joining at age 70 to pay for medical care from 70 until death. Which means someone else has to pick up the balance.

Thinking about it objectively, if your parents join now and pay, say, €750 per annum in premiums each, would you expect their future benefits to be more or less than this?

dublinario

AlexisM wrote: »

Health insurers lose massive amounts on over 65s - even with long waiting periods.

I can't comment on whether or not health insurers lose massive amounts on over 65s. Loss-making, I'll take on faith, but 'massive' losses? I amn't being churlish when I say that I honestly don't know.

AlexisM wrote: »

For insurers to 'do something' for over-65s, they would have to increase premiums across the board - including for the younger folk who are already paying in more than they get out each year.

This strikes me as an odd statement. Surely the profitability of any insurance is dependent upon more people than not "...paying in more than they get out each year." That is true regardless of insurance type or age profile.

AlexisM wrote: »

A big incentive to join early is to NOT face a long waiting period at a time when you might actually need cover. Remove the incentive, and more people will just wait to join when they reach the age when health insurance pays out more on average than the premium paid over.

Medical costs are massively skewed towards end-of-life. The reality is that even with waiting periods, insurers won't take in enough from people joining at age 70 to pay for medical care from 70 until death. Which means someone else has to pick up the balance.

I understand your point AlexisM. I could be completely wrong in thinking 10 years to be an excessive waiting period. Maybe it is already "generous" (in the context of a profit-making industry). But I do find it a little odd that both commenters on this thread seem very cocksure that 10 years is the threshold beyond which the profitability of the whole model would collapse.

Reverse the thought experiment: based upon all of the arguments in this thread, why not 12 years? It would certainly be more profitable.

To Elland Back

OP, in all likelihood, a person joining at 70 would never contribute anywhere near the premium level to the end of their lifetime as they need to cover the claim costs (as a whole).

No insurance system could operate by allowing people to take out a policy when a claim in inevitable.

BazzaDP

dublinario wrote: »

I do find it a little odd that both commenters on this thread seem very cocksure that 10 years is the threshold beyond which the profitability of the whole model would collapse.

Reverse the thought experiment: based upon all of the arguments in this thread, why not 12 years? It would certainly be more profitable.

I don't think the other commentators have stated 10 years is the "right number". They've just stated that older are more expensive and a disincentive is needed to make sure people don't just sign up when they're very very likely to make a large claim on it.

Insurance can be broken down a very simple calculation at the end of the day: Money In from premiums must be greater than Money Out in claims. It's supposed to be used for unlikely events where all the customers pay a (relatively) small amount in, and few of those customers have to claim a large payment out. And yes there are running costs and profits involved in the "Money Out" side as well but that's the reality of having a competitive market rather than just one government run insurer (like in the past) and/or a better run public hospital system so health insurance is not really necessary (like in the UK).

In any other insurance the risk of the claim is used to calculate the cost of the premium (so 18 year old new drivers are charged more for car insurance than a 40 year with 20 years no claims bonus). Ireland has deemed health insurance so important that it will instead use a community rating system for health insurance meaning everyone pays the same. Some people (particularly older people) will be inheritly more risky so this really only works if there is enough money in the pot, from non-claimers to balance out those that do need to claim. The current figure of 10 years is what's used in the calculation to set the premiums. Changing it to 5 years will make premiums more expensive for all, changing it to 12 will make it cheaper for all. There is no "right" answer but obviously different people will have different views.

You state that your parents did not buy health insurance previously because they could not afford it, rather than because they deliberately wanted to wait until they were likely to need it. That may not be the motivation, but the reality is that they HAVE waited until they are more likely to claim and are likely to take out more than they put in without this waiting period.

I guess the main point to take out of this is that the waiting periods (set by the regulator btw rather than health insurance companies) should be made more obvious to the general public so people are not caught out by this when it's too late. There is a further change called Lifetime Community Rating coming up next year which further discourages putting off health insurance until later in life, so maybe that will increase awareness as the government and insurance companies make people aware of this.

dublinario

BazzaDP wrote: »

I don't think the other commentators have stated 10 years is the "right number".

That's really all I've been digging my heels in over for the last few posts: the "right number" feels excessive. But more generally, I can't argue with the broader logic of all the commenters on this thread (and thanks for contributing too).

FYI, from discussions with the HAI today, Layla are currently waiving the 2 year waiting period for new ailments, as part of a temporary drive to attract new business. Their website makes no reference to this promotion, but (again, according to the HAI) this is purely because they didn't want to undertake alterations of their Ts & Cs.

The HAI rep seemed to think this promotion applied to over 65s too, but I'll believe it when I see it...

AlexisM

BazzaDP wrote: »

I don't think the other commentators have stated 10 years is the "right number".

dublinario wrote: »

That's really all I've been digging my heels in over for the last few posts: the "right number" feels excessive.

I don't think 10 years is the right number. I think it's too low. It should either be higher or else new elderly subscribers should be required to pay a joining premium (which would be several thousand euros) to make up for the years when they were not net contributors to health insurance. (I'm not trying to be harsh or mean here; this is just purely from a financial point of view).

It might help to look at the claims costs for health insurance. The HIA produce these each year in their market statistics report http://www.hia.ie/publication/market-statistics/

The extract of claims cost (euros per person) by age for 2013 is:
Under 18 ~ 208
18 to 29 ~ 299
30 to 39 ~ 513
40 to 49 ~ 562
50 to 59 ~ 926
60 to 69 ~ 1,708
70 to 79 ~ 2,945
Over 80 ~ 4,083

Across all age groups, the average is about 860. The system works because lots of young people pay more than their 'cost' for many years in the expectation that their claims will be paid in later years when their costs far outweigh their premiums.

I reckon by age 70, someone insured since birth will, on average, have paid 15K-20K more in premiums than will have been paid out. So that's their 'bank' which runs down as they get older. Some joining at age 70 doesn't have a 'bank' and without waiting periods will end up, on average, costing the insurer 15K-20K over their remaining lifetime. Waiting periods will reduce this cost somewhat but nowhere near enough. I don't think this is fair to other subscribers so I think a move to an 'age at entry' premium rating system is reasonable.

dublinario

AlexisM wrote: »

I don't think this is fair to other subscribers so I think a move to an 'age at entry' premium rating system is reasonable.

Thanks for contributing AlexisM. If I understand you as suggesting an age-based premium alongside a much-reduced waiting period for existing illnesses, then I think I'm in agreement with you.

AlexisM

dublinario wrote: »

If I understand you as suggesting an age-based premium

Not a pure age-based premium - an age at entry premium. So a 70 year old who joined at age 20 pays the same as a newly-joined 20 year old and the same as a 50 year old who joined at age 20. A newly-joined 70 year old would pay the same as an 80 year old who joined age 70 - but much more than a 70 year old who had been insured for 50 years.

dublinario wrote: »

...alongside a much-reduced waiting period for existing illnesses,

No. I really don't think existing illnesses should ever be covered by health insurance. That's not what insurance is for and it's not fair to other subscribers. If someone joins with a premium of 1K pa and an ongoing chronic illness with medical costs of 20K pa, how is that fair to other subscribers who will bear the cost?
The issue is exacerbated by the way the public system and health insurance interact in Ireland. If someone with ongoing medical costs of 20K pa moves from being a public patient to 'private', their treatment/facilities etc. might not change - but the costs are transferred (after the waiting period) from the public system to the health insurer (and on to all subscribers). So the patient is no better off but health insurance subscribers have to pay more.

BazzaDP

Do agree with most of what you say AlexisM except these parts:

AlexisM wrote: »

I really don't think existing illnesses should ever be covered by health insurance. That's not what insurance is for and it's not fair to other subscribers.

Yes but is it not also unfair to charge the same amount, but exclude certain (perhaps common) illnesses?

Also, in the same way, if you have a car accident should you not be able to get car insurance in future to include accidents because you're obviously more likely to have one?

The one difference is that with car insurance, it's risk rated, so in this instance you'll pay more while you build up your no claims again but there's no equivalent under community rating for health insurance.

However point is that excluding a pre-existing condition completely forever is very harsh.

AlexisM wrote: »

So the patient is no better off but health insurance subscribers have to pay more.

No sure I agree with this either. Depending on the exact condition the patient might get faster treatment if you need same operation again, or a private room... etc.

Also it's just an increased likliehood of reoccurrence, not a definite fact it will happen.

Personally I think the waiting periods currently are a pretty fair compromise. Annoying if you're stuck on the wrong side of them (particularly for elderly) but probably about right.

dublinario

AlexisM wrote: »

No. I really don't think existing illnesses should ever be covered by health insurance. That's not what insurance is for and it's not fair to other subscribers. If someone joins with a premium of 1K pa and an ongoing chronic illness with medical costs of 20K pa, how is that fair to other subscribers who will bear the cost?

Well, the waiting period of 10 years for over 65s is prohibitive, and effectively means that there is no coverage of existing illnesses for elder customers. So ironically (given the topic of this thread), elderly customers are the one demographic for which your preference is (broadly) true.

I do still feel that some of the logic in this thread is oversimplified -- or 'binary', as I earlier referred to it. For example, the logic is predicated upon younger people "building up" capital during their healthier years. But life isn't so simple. A 20 year old might join a policy for the first time, develop cancer that year, struggle manfully (and expensively) for two years and succumb.

An edge case? Well, yes, but so is the offered example of somebody joining with a premium of 1k and medical costs of 20k per-annum. The cited HIA statistics don't suggest that there is any such problem -- certainly not abuse on a scale that, if stamped out, would ripple down into a reduced premium for everybody else (and as an aside, I wouldn't assume that any particular reduction in provider costs would be passed onto customers in the form of a premium reduction).

I'm undeniably biased by my own circumstances, but I don't wish for the kind of system being hypothesised on this thread.

LostArt

some of you might find the introduction of Lifetime Community Rating interesting

http://www.hia.ie/consumer-information/lifetime-community-rating/#Why%20is%20Lifetime%20Community%20Rating%20being%20introduced?