Dáil debates

Thursday, 26 April 2007

Risk Equalisation (Amendment) Scheme 2007: Motion

 

11:00 am

Tim O'Malley (Limerick East, Progressive Democrats)

I move:

That Dáil Éireann approves the following regulations in draft:

Risk Equalisation (Amendment) Scheme, 2007,

copies of which have been laid in draft form before Dáil Éireann on 24 April 2007.

The changes being made in the scheme before the House give effect in the risk equalisation scheme to the legislation that was enacted last February to amend the Health Insurance Acts to protect our system of community rating. This country's policy of community rating means that no health insurer can set prices in a way that means people are unable to afford their premiums as they get older and more likely to need medical care. This fair and equitable approach eliminates the possibility of discrimination on the basis of age and health status.

Risk equalisation is a necessary feature in a community rated market. Prior to the enactment of the Health Insurance (Amendment) Act 2007, legislation allowed new entrants to the market, such as VIVAS Health, to avail of a three-year exemption from the obligation to make risk equalisation payments. The exemption was intended to give time to bona fide new entrants to establish themselves and build market share. When the original legislation was enacted, the Oireachtas intended that the exemption should be confined to new entrants which were coming into the market to build market share from scratch, using normal business practices. The risk equalisation scheme provided for such an exemption for new market entrants. The Government considers that the exemption has to be removed to protect the operation of the community rated market, which means that related changes have to made to the risk equalisation scheme. Most of the changes set out in the explanatory memorandum are of a technical nature and reflect the legislative changes which have been made. As returns are made on a six-monthly basis, covering January to June and July to December of each year, it is necessary to make the changes before the next returns are compiled and returned to the Health Insurance Authority at the end of July.

I will briefly outline some of the main changes which are being made. The Government is satisfied that the reduction is appropriate, having regard to the removal of the exemption; its receipt of the reports on the market; its views on the exemption; the Health Insurance Authority's report, which proposed an extension of the phasing process at the end of the three-year exemption period for a further three years; the need to ensure there is proportionality in the scheme; and the decision to reduce the payments that arise to 80% of the current level.

The zero sum adjustment, a technical mathematical balancing of moneys within the scheme, is also being amended. While it was a minor feature in recent criticisms of the scheme, the opportunity is being taken to amend the formula so that payments by any contributors will be clearly based on their own claims costs.

The amendments in article 11(3) and related changes to the formula and data to be submitted are designed to ensure that reported claims data remain consistent in circumstances where an undertaking is running down its business. Some other minor technical amendments are addressed in the explanatory memorandum.

A primary intention of the amended scheme is to balance the twin objectives of promoting competition in the health insurance market whilst at the same time protecting the integrity of community rating, both of which are to the benefit of the consumer. The Government is satisfied that the changes being made to the scheme are in the best interests of consumers and the development of the market.

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