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Written Answers - Health Insurance

Thursday, 9 February 2012

Dáil Éireann Debate
Vol. 755 No. 1

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 215.  Deputy Tom Fleming Information on Tom Fleming Zoom on Tom Fleming  asked the Minister for Health Information on James Reilly Zoom on James Reilly  his plans to address the increases to the cost of private health insurance resulting in thousands abandoning their policies every month as they can no longer afford the rising premium rates; and if he will make a statement on the matter. [7266/12]

Minister for Health (Deputy James Reilly): Information on James Reilly Zoom on James Reilly I am concerned that private health insurance is becoming harder to afford, especially for older people, as insurers increasingly tailor their insurance plans towards younger, healthier customers. Under Universal Health Insurance, everyone will be insured for health care and the current unfair discrimination between public and private patients will be removed. In the meantime, I am focusing on addressing the problems of the current private health insurance market, where insurers have a considerable financial incentive to cover younger, better risks rather than older, poorer risks.

I am strongly committed to protecting community rating, whereby older and less healthy customers should pay the same amount for the same cover as younger and healthier people. In order to protect community rating, we need a system of Risk Equalisation which ensures that community rating can survive. At present, we have an Interim Scheme, which has been in place since 2009. It is designed to compensate insurers which have older, less healthy customers and therefore higher claims costs, compared to insurers which have younger, less costly customers. It does so by a system of tax credits, based on age, in respect of persons of 60 years and over. Without such a system, community rating cannot survive. The Interim Scheme is funded by a Community Rating Levy, in respect of every health insurance policy written. I extended the Interim Scheme for a further year in 2012 under the Health Insurance (Miscellaneous Provisions) Act, 2011, and will introduce a more detailed Risk Equalisation scheme under new legislation from next January.

In order to keep down the cost of health insurance for older people, I increased significantly the age-related income tax credit for insured persons aged 60 years and over, from 1 January 2012. Without this support, health insurers would have had an even stronger financial incentive to ‘segment’ the market by offering policies targeted at young people, to the disadvantage of older customers.

I must emphasise that these measures are designed to result in no overall increase of premiums in the market and to spread the risk more evenly between the healthy and the less healthy, the young and the old. The increased levy is balanced by a corresponding increase in tax credits for older people, so that the system is Exchequer neutral overall. In this regard, it is important to note that the levy on policies is not a revenue collecting mechanism for the Exchequer. The Community Rating Levy, under the Interim Scheme, is placed on private health insurance providers for each insured individual, and not on the individuals themselves. It is a matter for the insurance providers as to the extent, if any, they pass the levy on to their clients.

In December 2011, I agreed with the three commercial health insurers to establish a Consultative Forum to tackle issues of mutual concern and this Forum will meet in the coming weeks. It is intended to work cooperatively in driving down costs related to health insurance and to identify savings that could be achieved by both public and private hospitals. I have already indicated to the insurers that I would be happy to hear proposals from them which [204]would result in lower costs for the health insurance sector. A new review of the VHI’s claims costs will be carried out to establish what further savings can be made. The review is be completed early this year and will contribute significantly to more effective cost control within the private health insurance market.

I am determined that these and other measures will have a significant impact in containing the level of any future increases in health insurance premiums. The Government’s clear objective is for the health insurance market to remain competitive as we move towards a new system of Universal Health Insurance.

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