Áine Brady (Kildare North, Fianna Fail)

The scheme will counter perverse incentives for insurers to focus on younger age groups, with insured persons less likely to face higher increases or product segmentation related to their age.

Deputies also raised the issue of possible overcompensation for the VHI. The purpose of the scheme is not to compensate the VHI but to continue making health insurance affordable for older people and those with poorer health. Under the scheme individuals aged of 50 years and older receive the tax relief irrespective of their insurers. The VHI has a significantly older age profile than the other two insurers. Furthermore, having regard to proportionality, the scheme has been designed so that it only partially compensates VHI. The Minister will on Committee Stage be bringing forward amendments to section 9(3) to give the Health Insurance Authority greater direction on the evaluation and analysis of the data it will be getting from the insurers and which will form the basis for the levy and credit in subsequent years.

With regard to the profits announced by VHI, the figures quoted refer to the annual returns for the year ending February 2008. The more recent returns covering the ten months to the end of December 2008 show that VHI was loss making, hence the level of premium increase it had to put in place at the start of this year.

Deputies raised the issue of the cost of health insurance for families, the cost of the levy for children and the position on waiting periods where higher levels of cover are taken out. Setting the levy at one third of the adult rate, or €53, recognises that the premium charged for children is significantly less than the adult price and that under the Health Insurance Acts the maximum amount that can be charged is 50% of the adult premium. The open enrolment regulations allow insurers to apply waiting periods when an insured person avails of higher levels of cover. This is a necessary protection for the insurers. Currently the waiting periods, which only apply to the additional elements of cover, are two years for a person under the age of 65 when first named under the higher contract or five years for a person of or over the age of 65 years. These waiting periods are being reviewed in the context of the preparation of the lifetime community rating regulations which will be put before the Houses for approval in the autumn.

Deputies also raised the issue of the possible size of the premium increases for over 60s in the absence of the scheme. It was incorrectly asserted this could not have taken place in a community rated system. Specifically targeted multiple products that provide different levels of cover above the minimum benefit for different types of conditions or higher priced products for older people and cheaper products targeting younger people lead to a fragmented market. These plans could still have been community rated in that they could have been made available in principle to all persons at the same price while in practice not being appropriate to all age groups or types of health status. This interim scheme and the longer term robust risk equalisation scheme will remove this incentive for fragmentation and support intergenerational solidarity, making the elderly, chronically ill and diabetics more attractive to the insurers who have gone after that market.

Deputy O'Sullivan asked why we are not bringing in the long-term scheme at this juncture. Having regard to the Deputy's point in regard to bringing forward a revised risk equalisation scheme at this time, the Bill before us is a specific response aimed at supporting the key principles of the market. Work on a long-term risk equalisation scheme will intensify following the passage of the Bill through the Oireachtas. It was not feasible to amend the previous scheme in the short term as, in addition to the specific issue on which the Supreme Court ruled, a range of other issues had also been put before the courts which would have to have been considered in bringing forward any amendments to the previous scheme.

I thank the Deputies who contributed to this debate. While the Bill contains two provisions which have attracted public attention, namely, the levy and credit, it is also important to bear in mind that the other key provisions in the Bill which reinforce the concept of intergenerational solidarity, community rated health insurance and the protection of older people are at the core of the health insurance system and strengthen the regulatory functions of the Health Insurance Authority on consumer protection.

It is intended that Committee Stage of the Bill shall be taken on Tuesday, 9 June 2009.

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