A report on the private health insurance market has concluded that insurers are continuing to adopt strategies that undermine community rating.
The report to Minister for Health James Reilly showed a practice of segmenting and selecting profitable business, through different pricing to targeted groups.
The Health Insurance Authority said that between July 2011 and July 2012 the number of people aged 18-29 with private health insurance fell by 10%.
It said that this trend is threatening to undermine the intergenerational solidarity that supports community rating.
The authority has suggested two measures to mitigate this trend.
Insurers could be allowed to apply a loading on people over the age of 30 who take out cover for the first time.
They might also be allowed to offer discounts to people aged between 18 and 29.
The HIA said the approach by insurers has been to provide a large number of plans.
Insurers are offering similar benefits but with significant differences in pricing, with lower cost plans being marketed to lower risk groups.
It said that three of the four insurers also have lower cost products with reduced orthopaedic and ophthalmic benefits in private hospitals and few older people are on these plans.
For products that mainly cover public hospitals, there is less difference in price between long-established products and newer products, although products offering limited maternity cover are significantly lower-cost.
The report also showed that VHI has just over 59% of the market, but its share has consistently fallen since the sector was opened up to competition.
Consumers generally are also switching to lower-cost plans.
Aviva Health had a €12.5m profit before tax for the year ending 2011. Quinn Healthcare, since renamed Laya Healthcare, made a pre-tax loss of just over €2m.
VHI Healthcare had an €800,000 loss.
The VHI's loss of members has been mainly in the younger age groups.
It has a much greater proportion of members in the age groups 70-74, but the difference is reducing.
The report said the main features of the market in the past year have been large price increases.
In some cases price increases have been over 20%.
The report highlights that there has been reduced benefits, corporate plans not marketed or offered to individual customers, penalties for stopping a policy during a year and special offers for children.
The report was submitted to Mr Reilly in November and is published on the Department of Health's website.
It provided advice on how risk equalisation credits, which vary by age, gender and level of cover, should be assigned under changes which come into effect from the end of this month.
The complex risk equalisation scheme - a cost neutral fund - is aimed at keeping prices affordable for older members.
It levels out the risk and compensates insurers who have more older and costlier subscribers.