The challenge of longevity and the commitment to intergenerational solidarityacional

The sustained increase in life expectancy, one of the great contemporary social achievements, is redefining the functioning of the healthcare system and, in particular, health insurance. This is one of the main conclusions presented by Víctor Molina, actuarial manager at Assistència Sanitària, at the conference ‘The challenge of longevity in health insurance’, organised by the Association of Actuaries of Catalonia.

The current demographic transformation – marked by a longer-living society with growing medical needs – has led most insurers to promote premium models based on the personalisation of individual risk: age, medical history, habits or expected use of services. This approach, while maximising short-term economic efficiency, has a direct impact on the most vulnerable groups.

According to Molina, ‘extreme personalisation breaks with the fundamental logic of insurance as a mechanism for mutual protection. When premiums increase exponentially with age, it ends up creating an exclusion effect at the point in life when people most need medical care.’

An exclusionary effect with social consequences

The conference highlighted that this exclusionary effect has not only individual but also collective implications: people who, once retired and with more limited incomes, find themselves unable to afford increasing premiums and are therefore excluded from the private system at a time of maximum vulnerability. 

This leads to a lack of health protection and exclusive dependence on a public system with accessibility problems, as well as delays in diagnosis and treatment, with associated clinical risks and emotional impact, as people feel excluded after decades of maintaining their insurance. Another consequence is the additional pressure this places on the public system, which must take on elderly patients with more complex needs.

In a context of growing regional inequalities and a steady increase in the population over 70 years of age – which has risen by 9 percentage points since 1975 – this phenomenon takes on a special dimension.

An alternative response based on intergenerational solidarity

Faced with this scenario, Assistència Sanitària applies a different formula. The entity, created by doctors with a vocation for patient service and controlled by a cooperative, maintains a premium adjustment model that prevents the premium from increasing due to individual use of services. The cornerstone of this system is the intergenerational solidarity rate, a mechanism that partially redistributes the cost of age-related risk.

This modulating mechanism makes it possible, on the one hand, to reduce the premium increase curve in older ages, making it affordable and stable. On the other hand, it prevents the expulsion of older policyholders, preserving continuity of care and, finally, maintaining the mutualising essence of insurance, based on the idea that we all age and we may all need protection at some point.

Despite its lower appeal in terms of economic efficiency or profit maximisation, Dr Ignacio Orce, president of Assistència Sanitària, argues that opting for this formula ‘is an act of collective responsibility and sustainability of the health model itself’. He also states that ‘intergenerational solidarity may make us less competitive in the younger segments compared to insurers that apply strictly personalised premiums, but it is not a question of some paying for others, but of everyone contributing to a system that will protect them in the future’.

Longevity, a sectoral challenge that requires a collective response

From a sectoral and actuarial point of view, better management of longevity risk cannot be based solely on individual will. If a few entities apply solidarity formulas, this generates anti-selection that penalises them in attracting young policyholders, while those that opt for strictly personalised models continue to encourage the expulsion of the most vulnerable. The sustainability of the private healthcare system requires sectoral and regulatory reflection to ensure that private healthcare remains a solid complement to the public system and not an exclusive space.