Dr. Fergal Lynch:

The Minister referred to the private health insurance sector. Deputies and Senators are concerned about the rising cost of premiums. As the Minister noted, one major and obvious issue is the increase in claims costs. The Health Insurance Authority's latest report indicates that claims costs increased by 14% last year, of which approximately 4% was for actual costs and the remaining 10% was accounted for by an increase in volume. The critical issue to address is the volume of claims. As the Minister stated, the number of people covered by private health insurance has decreased, whereas the number of claims has increased. This is a critical issue which must be addressed.

Last year the Minister appointed a consultative forum on health insurance which I chair. The forum comprises representatives of the four health insurers, the Health Insurance Authority and the Department. We have been working intensively on issues related to the cost and affordability of health insurance. While this is not an easy issue to address, we remain fully focused on doing so. Some of the issues on which progress has been made include data sharing and, more importantly, the risk equalisation scheme. Risk equalisation goes to the heart of the issue of the segmentation of the market and the targeting by insurers of younger people. The Minister enacted legislation at the beginning of this year for a new risk equalisation scheme. He has also pointed out that what we need to address the proliferation of plans - as we heard, there are more than 200 plans on the market - is a single standard plan against which everything else could be benchmarked. We are working with the industry on this and all those involved have signed up to the concept of a single standard plan. This would allow people to compare like with like, as every insurer would have one standard plan and costs could then be compared across the board. Consumers would find this much easier. This not to say there would not be other plans, but the standard plan would be the critical one against which everyone could make comparisons.

Equally, the focus on costs could be directed towards that and we would only risk equalise to the extent of that standard plan. That is an important set of issues which we need to deal with in this context.

We are also keen to deal with measures that would encourage greater participation of younger healthier people in the health insurance market. The difficulty we face at the moment is that more older people are joining and more younger people are leaving. The more we can encourage something in the opposite direction, the better. One possible scope is lifetime community rating although that will become irrelevant when we go to universal health insurance. Anyway, perhaps there is a case for introducing it in the meantime at a basic level because it sends a certain message.

The critical concern we have relates to agreeing measures throughout the industry to address costs. We have to be careful about competition law as well. There is no question of cartels or price fixing but there are things we can do at departmental level and throughout the industry to address those costs. The Minister has stated that he is particularly concerned about the costs in VHI. The company has submitted a plan. We are seeking a more ambitious approach to it and I believe that will be possible in the coming while.