Áine Brady (Kildare North, Fianna Fail)

I would like to take this opportunity to respond to issues raised by Deputies on Second Stage of the Health Insurance (Miscellaneous Provisions) Bill 2008.

Deputy Reilly spoke about the strong regulation that exists in the Netherlands. The reality is that the strongest part of the regulatory framework in the Netherlands is its risk equalisation scheme, which aims at removing perverse incentives for insurers to pursue strategies that would make them less attractive to the elderly and the ill. The Deputy is aware that the health insurance market in the Netherlands operates with a risk equalisation scheme and a minimum level of cover. As he pointed out, the authorities in that country have managed to make the elderly, chronically ill and diabetics more attractive to insurers who have gone after that market. This was achieved through risk equalisation because other elements of the regulatory framework cannot give this result.

Deputies raised the question of the relationship between current employment trends and private health insurance costs to employers. The number of people with health insurance has increased in line with employment growth but, given the current economic climate, a fall in numbers taking out cover is likely and there is some evidence of a small decline in the insured population during the first quarter of 2009. Factors contributing to this decline include the closure or downsizing of companies which paid private health insurance on behalf of their employees or made contributions thereto and individuals who had been paying for their insurance and find themselves out of work. However, the cost of health insurance for employers has to be considered in the context of the overall aim of the scheme and maintaining intergenerational solidarity in particular. The overall effect of the levy and credit is neutral. Where premia have been increased by insurers, this simply reflects the age profiles of the insurers concerned and the fact that in the absence of a risk equalisation mechanism they have not been contributing to intergenerational solidarity across the insured population. The reality is that all persons in a community rated market should be paying a premium that supports the application of community rated health insurance across the entire market. As stated on Tuesday, amendments to address technical issues relating to the operation of the scheme and other issues raised by the industry will be brought forward on Committee and Report Stages.

With regard to the Deputies' inquiries on premium price increases following the announcement of the levy and credit, the Minister has no role to play in the setting of prices by any health insurance provider. This is a commercial decision for the insurer concerned. The level of increase at the start of this year was influenced primarily by the additional cost pressures insurers faced due to medical inflation, the increase in capacity in the private sector and the move towards economic pricing of public pay beds.

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