James Reilly (Dublin North, Fine Gael) | Oireachtas source

I have consistently emphasised the vital need to address the rising cost of private health insurance and the necessity for all private health insurers to address their cost bases aggressively. Last year, I established the consultative forum on health insurance to generate ideas to address health insurance costs. During the summer, I appointed an independent chairperson, Mr. Pat McLoughlin, who will work with my Department and the insurers on a review process to give effect to real cost reductions in the private health insurance market. I want all insurers to address the base cost of their claims and to see all procedures provided in an appropriate and safe health care setting.

The Health Insurance Authority, the independent statutory regulator of the private health insurance market, recently provided my Department with information on claims costs in the private health insurance market. Almost €2 billion was paid in claims by private health insurers in 2012. Some 46% was paid to private hospitals, 27% to public hospitals, 20% to consultants and 7% mainly for outpatient benefits. The average claim per insured person increased by 12.6% per annum between 2008 and 2012, largely as a result of increased usage of hospital services, with insurers attributing premium increases to increased claims costs and ageing memberships. Clearly, increases of this magnitude are not sustainable.

Community rating is a fundamental cornerstone of the private health insurance system, but it is under pressure from the market segmentation strategies being used by insurers as they seek to minimise their risks by trying to enrol younger, healthier lives. The Government is committed to the principle of community rating and, in 2012, clearly demonstrated this by introducing a permanent scheme of risk equalisation. The new scheme, which took effect from January 2013, is an essential support to community rating, providing a cost subsidy from the young to the old and from the healthy to the less healthy. The continued participation of younger customers in the market is clearly important and is one of the issues that the consultative forum is actively considering.

Work on these issues is progressing and I welcome the positive engagement by the private health insurers in the process but we need more robust audits. We have started that process with the VHI. Indeed, a large private hospital in this country - I will not say where - needed to repay €5 million. Another case saw €7 million being returned by doctors.

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