The high cost of private health insurance is threatening Ireland’s competitiveness as a location for foreign direct investment, according to a global consultancy.
Aon Ireland, whose multinational clients include many of Ireland’s largest FDI employers such as Apple, Intel and Google, has warned the government the cost of health insurance is unsustainably high.
It claimed only the US imposed higher costs than Ireland on companies that paid for employees’ medical cover. Aon warned the issue was especially damaging for Ireland while American president Donald Trump was offering tax and other incentives to encourage US multinationals to repatriate more of their operations.
“There is increased concern that the cost of providing private medical insurance is unsustainable,” said Aon.
“Irish medical [insurance] is the largest benefit expense outside of the US for a number of these companies . . . We are having tough conversations at C-suite level about the cost of benefits and the weakening competitive positioning of Ireland — even against the US.”
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Other large employers listed by Aon as clients in Ireland include Johnson & Johnson, Medtronic, Boston Scientific, IBM, Salesforce, Eli Lilly and Amgen.
Aon queried the central plank of Ireland’s health insurance model, community rating, which forbids price discrimination, even though multinationals tend to have younger staff who pose a much lower insurance risk. “There is an increased awareness that companies are being asked to bear a disproportionate burden in supporting the community rating system,” said Aon.
The comments were made in a letter to the Health Insurance Authority (HIA), which was seeking feedback on rules introduced in 2015 to bolster the community rating system. The rules, known as lifetime community rating, penalise those who wait until they are over 34 to take out cover for the first time by hitting them with higher premiums for life.
Aon urged the HIA to recommend that insurance providers were free to drop the penalties for large corporate clients.
Lifetime community rating has also been attacked by several government departments and agencies, which claim it discriminates unfairly against staff who are older than 34 when they return to Ireland from postings overseas.
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“The current inequitable anomaly penalises those both contractually obliged to and those willing to serve the state abroad, often in difficult and challenging locations,” said the Department of Foreign Affairs. “This is totally unacceptable. It is also a significant disincentive to staff to take assignments abroad at a time when Ireland needs to be fully engaged with promoting its interests.”