Billy Kelleher (Cork North Central, Fianna Fail) | Oireachtas source

To be clear, Article 106(2) of the Treaty on the Functioning of the European Union clarifies whether risk equalisation constitutes a state aid. It does not include a reference to whether the relevant figure should be 8%, 9% or 10%. According to the Minister, the figure is determined by the HIA on the basis of its assessment of what would be a reasonable profit rate return on equity. If we allow VHI to make a profit of 12% on its equity before it is deemed to be over-compensated by the fund, the effect will be that the company will receive more in compensation than it would if the figure was 10%. That is a statistical and mathematical fact. It is not a logarithm or an algorithm; it is a mathematical equation.

It would be better if there were more young people in the insurance market than is the case, regardless of whether they are cherry-picked. The HIA’s report makes it clear that young people are dropping out of the health insurance market in their droves. The method of transfer in the risk equalisation fund from other insurers to VHI, on the basis of the company’s demographics and age cohort, means that insurance will cost more. That is a simple fact. Therefore, young people will not be encouraged to enter the health insurance market in the first place. That will mean that there will be fewer people supporting the risk equalisation fund and thereby supporting older people.

I would like to take up the Minister on what he said about the fact that insurance companies were making money out of young people. Of course, they are making money out of young people. It is better that there be more young people insured in order that they will transfer to the risk equalisation fund. That is what the fund is for.

It is better that there would be more young people insured so they would transfer to the risk equalisation fund. That is the purpose of the fund. The Minister should be doing everything in his power to assist and encourage aggressive marketing by the insurers of good quality cover that would be attractive to young people and the opposite is the case. This is one more case in point. The 12% will mean that there will be a larger transfer from younger healthier people to VHI's cohort, which means higher insurance for younger people. I do not understand how the Minister does not see that as the corollary of what will happen.