Frank Feighan (Sligo-Leitrim, Fine Gael) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I am pleased to address the House on Second Stage of the Health Insurance (Amendment) Bill 2022. This is an annual technical Bill comprising eight sections, all focused on the specific area of health insurance. This legislation is required each year to revise the amounts of credits and levies, ensuring not only that the risk equalisation scheme operates in a consistent and fair manner but also that it generates sufficient income in order that it is self-financing. The amendments outline in the Bill will ensure the ongoing sustainability of the private health insurance market, with the aims of avoiding overcompensation being made to insurers and having fair and open competition in the market, as required under the EU framework for state aid.

I will outline briefly the background and purpose of risk equalisation before outlining the specific provisions, which will apply next year. Over 46% of the population of Ireland holds private health insurance. That amounts to 2.4 million people and represents a total annual premium income of approximately €2.97 billion. Health insurance in Ireland is provided according to four principles: open enrolment, lifetime cover, minimum benefit and community rating. Unlike with other types of insurance, in our health insurance market customers are not charged based on their risk profile. That means that the premium charged for a particular health insurance product is the same for everyone. Insurers cannot take into account personal circumstances like health status risk or age, in which case older and sicker people would pay much more for health insurance than they currently do.

Risk equalisation is a mechanism designed to support the objective of a community-rated health insurance market. The risk equalisation scheme has operated in the health insurance market since 1 January 2013 and is provided for under the Health Insurance Acts. Under the scheme, insurers receive risk equalisation credits from the risk equalisation fund to compensate for some of the additional costs of insuring older and less healthy members. Risk equalisation credits are funded by stamp duty levies. The levies are payable by health insurers on all health insurance contracts written and are paid into the risk equalisation fund. None of the stamp duty on health insurance contracts goes to the Exchequer; it is all used to fund risk equalisation credits.

The risk equalisation fund is managed by the Health Insurance Authority, the independent regulator of the health insurance market. A health insurance Bill is necessary each year to update the amounts of risk equalisation credits paid to insurers and the stamp duty levies required to fund them. The rates of credits and levies are based on recommendations from the Health Insurance Authority following an evaluation and analysis of health insurance claims. The Minister for Health has approved the risk equalisation credits to apply in 2023 and the Minister for Finance has approved the corresponding stamp duty levies. As the risk equalisation scheme is deemed to be state aid, it must be approved by the European Commission. It was last approved in March 2022 to operate until March 2027.

In addition to the standard technical amendments, this year's Bill provides for the specification of the end date of the act of entrustment. The act of entrustment is the legislative mechanism under which the risk equalisation scheme operates. This is a requirement of the European Commission as part of its approval of the risk equalisation scheme earlier this year. The Bill makes further provision for the appointment and powers of authorised officers of the Health Insurance Authority, thus strengthening the enforcement powers of the authority in carrying out its role as regulator of the private health insurance market.

I will now outline the sections of the Bill.

Section 1 defines the principal Act as the Health Insurance Act 1994.

Section 2 amends the principal Act by inserting a new section 6B. The new section specifies the end date of the act of entrustment, the legislative mechanism under which the risk equalisation scheme operates, as required by the European Commission as part of its approval of Ireland's risk equalisation scheme. The end date for the period of entrustment should be viewed as a technical end date required under European law. The date matches the duration of the Commission's approval of the operation of the risk equalisation scheme. This section provides for an order-making power for the Minister to specify a new date after consultation with the European Commission and the Minister for Finance. This power will provide the Minister with the authority to extend the duration of the period of entrustment in exceptional circumstances in order to ensure the continuity of the risk equalisation scheme.

Section 3 amends section 11C of the principal Act to provide for 1 April 2023 as the effective date for revised credits payable from the risk equalisation fund.

Section 4 amends section 18E of the principal Act by making further provision for the appointment of authorised officers of the Health Insurance Authority. The amendments outline in more detail who may be appointed as an authorised officer and when the appointment may cease. It follows, insofar as possible, the Central Bank (Supervision and Enforcement) Act 2013, as amended.

Section 5 amends section 18F of the principal Act by extending the current legislated enforcement powers to non-registered businesses purporting to be carrying on health insurance business in Ireland. This amendment bridges a limitation of the existing legislation, which permits investigation only of registered undertakings. Again, this section follows, insofar as possible, the Central Bank (Supervision and Enforcement) Act 2013, as amended.

Section 6 replaces table 2 in Schedule 4 to the principal Act. The table revises the applicable risk equalisation credits payable from the risk equalisation fund in respect of certain classes of insured persons. The amounts are applicable on or after 1 April 2023. The Bill provides for a decrease in the age-related risk equalisation credits payable across approximately half the age groups over 65. These decreases are to facilitate the redistribution of high-cost claims credits, which result in a more targeted distribution of credits based on health status rather than age.

Section 7 amends section 125A of the Stamp Duties Consolidation Act 1999 to specify the applicable stamp duty rates to apply to the market in 2023. As I outlined earlier, the risk equalisation scheme is Exchequer-neutral. It is not funded by the State, and the State does not derive any funds from it. The amount of stamp duty levy is calculated to offset the costs associated with the payment of risk equalisation credits. The Health Insurance Authority recommends the amount of stamp duty levy to the Minister, having regard to the risk equalisation fund sustaining surpluses or deficits from year to year.

The amount of stamp duty payable on a health insurance contract depends on whether a contract is advanced or non-advanced. Non-advanced contracts provide for mostly public hospital cover, while advanced contracts provide a higher level of cover and cover in private hospitals mainly.

For next year, the stamp duty payable on non-advanced health insurance contracts from 1 April 2023 will be €109 per adult, which is a decrease of €12 from 2022 rates and €36 per child, a decrease of €4. On advanced health insurance contracts, the stamp duty will be €438 per adult, this is an increase of €32 from 2022 rates and €146 per child, an increase of €11. A surplus of €55 million, or 7% of the fund, is expected next year as there was a lower level of claims on the fund than anticipated. The Health Insurance Authority recommended that this €55 million should be used to reduce the amount of stamp duty to be charged from 1 April 2023. The rates of stamp duty payable incorporate the €55 million surplus. This surplus has built up because of lower claims due to lower levels of hospitalisations as a result of Covid-19, and an increase in expected stamp duty receipts due to higher numbers of people entering the health insurance market than had been projected.

Section 8 provides for the Short Title, commencement, collective citation and construction of the Bill.

To summarise, this Bill allows us to maintain the community rated health insurance market. The provisions of the Bill increase the effectiveness of the risk equalisation scheme. Risk equalisation credits based on age are reallocated to those based on health status, in the form of high cost claim credits, without increasing the stamp duty payable, which is a fundamental support to the market. Importantly, the programme for Government commits to retaining access to private health care services for people in Ireland, ensuring choice for those accessing healthcare.

This Bill continues our policy of ensuring solidarity with and affordable premiums for less healthy people or older people. These policy aims are supported by the public according to a 2021 Health Insurance Authority national survey, where 79% of those surveyed agreed that premium prices should not be dictated by a person's current health. The same survey confirmed 72% agreed that older people should not be charged more for health insurance.

Finally, while the Government continues to maintain the community rated private health insurance market, I will conclude by highlighting the Government's commitment to improving public health services under the Sláintecare programme. As access to these services improves, the Department will monitor the impact on the health insurance market over time. I commend this Bill to the House.

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