Peter Fitzpatrick (Louth, Fine Gael)

I welcome the opportunity to speak about the Health Insurance (Miscellaneous Provisions) Bill 2011. The four principles of private health insurance in Ireland are community rating, open enrolment, lifetime cover and minimum benefit. The Health Insurance Act 2009 introduced, on an interim basis, a system to deliver on the policy position supporting community rating, which is achieved by risk equalisation. A more robust, transparent and effective scheme for risk equalisation to support the core policy of community rating is to be introduced from 2013. Therefore, the current Bill will extend the interim scheme for a further year, while the details of the 2013 scheme are advanced.

At this juncture it is worth examining the idea of risk equalisation, as it is a term that is often bandied around, and in some cases by people who do not have a clear understanding of it. Risk equalisation is a process that aims to neutralise, in an equitable manner, differences in insurers' costs that arise due to variations in the health status of their members. Risk equalisation involves transfer payments between health insurers to spread some of the claims cost of high risk members among all the private health insurers in the market, in proportion to their market share. Risk equalisation is a common mechanism in countries with community rated health insurance systems.

It is worth examining the background to the current legislation. The Health Insurance Acts 1994 to 2009 provide the statutory basis for the regulation of the health insurance market in the interests of the common good. At the centre of the common good is intergenerational solidarity between all insured persons and community rated health insurance. Following the July 2008 Supreme Court judgment people continued to have access to community-rated health insurance plans and to benefit from other common good protections such as open enrolment and lifetime cover.

However, the reality is that in the absence of a mechanism to support inter-generational solidarity there are incentives for insurers to design products that are attractive only to healthier lives, undermining inter-generational solidarity and the common good protections. This would not be universally beneficial to all members of the State and certain sections of society could easily be discriminated against or simply left uninsured. In these circumstances the market can be subject to fragmentation and inter-generational solidarity weakened. In the absence of an appropriate response, it would be in the interests of all insurers to focus on products that would be particularly attractive to healthier lives and to minimise features in their products that would be attractive to older people and those who suffer ill-health. This conflicts with the common good principles underlying regulation of the market and should not be acceptable to any understanding Government.

The Health Insurance (Miscellaneous Provisions) Act 2009 was enacted for these reasons. Its main objectives were to affirm that the purposes of the Health Insurance Acts were to ensure that access to health insurance cover is available to all consumers without differentiation in respect of age and health status, to strengthen the provisions to achieve this purpose, to enhance inter-generational solidarity and community-rated health insurance and to provide for the implementation of related measures to achieve these objects. This has proved to be solid legislation with one noteworthy element. The key measure was the introduction, in respect of persons aged 50 years and over and for the period 1 January 2009 to 31 December 2011, of a new age-related tax credit in respect of payments due in that period of private health insurance premiums.

This measure was to be funded by the collection of an annual levy on health insurance companies based on the number of lives covered by policies underwritten by them. These measures provide that health insurers receive higher premiums in respect of insuring older people and that older people receive tax credits equal to the amount of the additional premium such that all people continue to pay the same amount for a given health insurance product. In this way community rating is maintained while insurers receive higher premiums in respect of older people to compensate partly for the higher level of claims.

This method of sharing costs is known as the interim scheme of age-related tax credits and community rating levy and is a scheme of considerable benefit. The main object of this Bill is to continue to ensure that in the interests of inter-generational solidarity the burden of the costs of health services are shared by insured persons by providing that the cost subsidy between the young and the old, as provided for by the Health Insurance (Miscellaneous Provisions) Act 2009, is continued for a further year. There is considerable merit in this and I have no hesitation in recommending the Bill to the House.

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