Dan Neville (Limerick, Fine Gael) | Oireachtas source

I welcome the opportunity to discuss the Bill. Difficulties in the area of risk equalisation have arisen since 2005. I was a member of the Joint Committee on Health and Children during that period and it was extremely frustrating that progress could not be made.

I raise another issue that was mentioned, namely, that private beds in public hospitals should be paid for 100% by patients. There is an argument for that because the beds are private, but I offer another argument. Those of us who use public services pay for this through our tax. We know how much the public health service requires from the taxpayer in order to ensure provision of proper health and hospital services. However, private patients who seek private accommodation and treatment in public hospitals also pay tax for the running of hospitals. There might be an argument that they should pay a certain premium in insurance but it should be recognised that private patients who have private insurance or who opt for private treatment are contributing to those beds through their taxes as well as through the fees charged.

The Minister for Health has consistently raised the issue of cost with health insurers and has stated his intention to address costs in the sector in the interest of consumers. In discussing this matter, we use terms so lightly they roll off us. I offer the example of community rating, which is not fully understood by the public. We should be careful when we use language in public discourse so that people can understand what we are saying. Community rating is a system whereby a person's age does not determine the level of premium he or she pays. There are some exceptions to the rule under which people pay the same premium regardless of age, one of these being children, whose premiums must be no more than 50% that of an adult. This applies also to full-time dependent students under the age of 23, whose premiums may be reduced, although not below 50%. All of us are members of group schemes which offer a 10% reduction. In addition, pensioners or those who have restricted membership with an insurance scheme may have their premiums reduced.

Health insurance claim costs indeed increase with age, as the previous contributor noted. The average claim cost for people aged 70 to 79 in 2011 was €4,442, compared to €224 for those aged 18 to 29, which equates to less than 10% of the pay-out for the former group. VHI Healthcare has a much higher proportion of older lives than the other two organisations, Aviva Healthcare and Laya Healthcare. For example, in December 2011, the VHI had a 56% market share in the 0 to 49 age group and a 90% market share of the over 80 age group. This means that the VHI has a higher average claim cost per member than Aviva or Laya. Risk equalisation is a process that aims to neutralise in an equitable way differences in insurance costs that arise from variations such as age and insurer profile. It involves the transfer of payments among health insurers in order to spread some of the claim costs of the high-risk older members among all private health insurers in the market in proportion to their market shares. In the absence of an effective risk equalisation scheme, there is a threat to the existence of a community-rated market when significant differences in risk profile exist between competing insurers. Risk equalisation is a common mechanism in countries that have community-rated health insurance systems. Although private insurers do not actively market towards younger persons, there are ways of encouraging a younger membership. It is important that there is a system of comparison between products of different insurance companies. For many who might consider moving from one provider to another, the differences in benefits offered by the various products are often unclear.

In 2005, the Health Insurance Authority recommended commencement of risk equalisation, and in December of that year the Minister for Health and Children decided that risk equalisation payments would commence on 1 January 2006. A court-imposed stay was made on payments until there was a ruling on constitutional challenges to the risk equalisation scheme. In July 2008 the Supreme Court ruled that the scheme was unconstitutional. In November 2008, the Government announced an initiative of an interim age-related tax credit and health insurance levy to support the cost of health insurance for older people. The interim system was designed to last for three years and to be Exchequer-neutral. In May 2010 the Government announced a comprehensive strategy and set of actions for the health insurance market. These included the development of a full and robust new risk equalisation scheme that would start in 2013, and the implementation of a new transitional arrangement from 2012 that closely approximated the effect of the full risk equalisation scheme. The Health Insurance Authority published a consultation paper on risk equalisation on 21 June 2010 which was submitted to the Minister in December of the same year. That is the background to the presentation of the Bill today.

The State supports the private insurance market through tax relief at source of 20% of health insurance premiums. It also supports the community-rated market by providing age-related tax credits in respect of those aged over 60 in order to help meet their higher claims costs. This is the commitment by the State. Everybody accepts that community-based health insurance should be protected.

The Government's policy on private health insurance states that private health insurance can also play an expanding role in providing cover for primary care. The Minister has stated that expanding primary care with health insurance minimum benefits can dovetail with reform of public health eligibility legislation. Primary care can thus play a more pertinent role in the health care of the entire population. At the same time, the Government has left open the option of introducing compulsory private health insurance. Public health insurance does not offer satisfactory protection for poor people at high risk or for high-risk individuals.

Little research has been carried out with regard to the real effects of mandatory public health insurance on quality, care and efficiency.

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