Kieran O'Donnell (Limerick City, Fine Gael)

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

I am pleased to have this opportunity to speak on the Second Stage of the Health Insurance (Amendment) Bill 2025, which I am taking on behalf of the Minister for Health, Deputy Jennifer Carroll MacNeill. This is an annual, technical Bill with eight sections, focused on the specific area of health insurance. It also seeks to make a change to the term of appointment of the chairperson of the Health Insurance Authority.

Today, 46% of the population, 2.54 million people, hold private health insurance. This represents an annual premium income of about €3.8 billion. Health insurance in Ireland is built on four key principles, and I will briefly outline each of them. The first is open enrolment. This means that anyone can buy a health insurance policy at any time, regardless of age, health status or medical history. Insurers cannot refuse cover because someone is older or has an illness. The second is lifetime cover. Once people have health insurance, they can keep it for life provided they pay their premiums. Insurers cannot cancel a policy because the person becomes sick or make claims. The third is minimum benefit. Every policy must include a basic level of cover set by law. This ensures that all customers receive a minimum standard of benefits. The final principle is community rating. Everyone pays the same price for the same plan, regardless of age or health. Insurers cannot charge more because someone is older or has a medical condition. These principles are the foundation of fairness in our health insurance system.

What is the risk equalisation scheme? The risk equalisation scheme is the key mechanism that keeps our health insurance market fair and sustainable. In a community-rated market, everyone pays the same price for the same policy, regardless of age or health. However, older and sicker people cost more to insure. Without the support of the risk equalisation scheme, insurers with more high-risk customers would face higher costs and premiums could rise. The risk equalisation scheme helps to resolve this. It works by redistributing funds between insurers. Insurers which cover older and sicker members receive credits to offset their higher costs. These credits are funded by stamp duty paid by the insurer for each health insurance policy it issues. The Revenue Commissioners collect the stamp duty and transfer it to the risk equalisation fund, which is managed by the Health Insurance Authority.

What are risk equalisation credits? There are three types of credits in the risk equalisation scheme. The first is age-related credits. These are payments to insurers to help cover the higher cost of insuring older customers. Older people generally use more healthcare services, so their claims cost more. Without these credits, insurers with more members who are older would face higher costs and would likely pass these on to their members in higher premiums. The second is hospital utilisation credits. These credits compensate insurers when their members use hospital services, either for overnight stays or day cases. They help spread the cost of hospital care across the market. The third is high-cost claims credits. These credits are for very expensive claims. If a claim goes above €50,000 in a year, part of that cost is covered by the risk equalisation fund. This protects insurers from the impact of extremely high claims and keeps premiums stable. The Bill makes changes to all three risk equalisation credits. The proportion of age-related credits will decrease slightly while health-related credits will increase by the same amount. Age is not always an indicator of bad health, so this change better aligns credits with actual health status.

In terms of stamp duty rates, health insurance policies fall into two categories: advanced and non-advanced. Non-advanced contracts mainly cover treatment in public hospitals. They provide a more basic level of cover and are generally less expensive. Advanced contracts, on the other hand, offer a higher level of cover, including access to private hospitals and additional benefits. These plans cost more because they provide greater choice and flexibility for customers.

There are four different rates of stamp duty depending on whether the policy is advanced or non-advanced and whether the customer is an adult or a child.

The rates for non-advanced policies and children are lower, reflecting lower levels of claims. Stamp duty is a ring-fenced contribution to the risk equalisation fund and supports the credits to enable fairness and sustainability in the private health insurance market.

Each year, credits and stamp duties are updated to reflect changes in claims and costs. Medical inflation and private hospital costs are driving claims higher. Medical inflation simply means the cost of healthcare is rising every year. Hospitals charge more for procedures. New treatments and technologies are more expensive and wages and operating costs continue to increase. Even if the number of claims stays the same, the cost of those claims goes up. This is one of the main reasons risk equalisation credits and stamp duties need to increase. The annual changes help to keep the system fair and sustainable. If the Government does not adjust the stamp duty rates every year, the scheme could run out of money. This could mean even higher increases to stamp duty later on or the Government having to step in to fund the scheme directly.

In terms of public support, there is strong public support for community rating in private health insurance. The Health Insurance Authority carried out a survey this year that showed that 64% of those surveyed agreed that health insurance prices should not depend on an individual’s health condition and 72% agreed older people should not pay more for their health insurance.

I will now briefly outline the sections of the Bill. Section 1 confirms that the principal Act is the Health Insurance Act 1994.

Section 2 sets the 1 April 2026 as the date when the new credits from the risk equalisation fund will take effect.

Section 3 updates the term of appointment for the chairperson of the Health Insurance Authority, bringing it in line with the code of practice for the governance of State bodies.

Section 4 increases the hospital utilisation credit. From April 2026, overnight stays will rise from €163 to €165 and day cases will rise from €81 to €100.

Section 5 revises the age-related credits. These credits depend on age, sex and level of cover. They will increase for all advanced products and most non-advanced products to reflect higher number and cost of claims.

Section 6 strengthens the high-cost claims pool credit, which helps insurers to cover very expensive claims. The share of costs covered will rise from 45% to 50% for claims over €50,000 in a 12-month period.

Section 7 sets new stamp duty rates to fund these credits. From 1 April 2026, adult advanced plan stamp duty is going up by €48 to €517, child advanced plan stamp duty is going up by €16 to €172, adult non-advanced plan stamp duty is going up by €9 to €103, and child non-advanced stamp duty is going up by €3 to €34. These increases are calculated to keep the scheme Exchequer neutral. An €8 million surplus in the fund will be used to reduce the level of stamp duty that would otherwise apply.

Section 8 deals with the Short Title, commencement and construction of the Bill.

This Bill ensures the continued fairness of our community-rated health insurance market. It strengthens the risk equalisation scheme and supports affordable premiums for older and sicker people, principles that are backed by the public. These amendments achieve our objectives in three ways. First, they support the sustainability of the private health insurance market by ensuring that credits and stamp duties reflect the real cost of claims. This keeps the risk equalisation fund balanced and avoids sudden shocks to premiums. Second, they prevent overcompensation to insurers. The changes to age-related and health-related credits are carefully calibrated so that insurers receive fair support from the fund. Third, they maintain fair and open competition in line with EU state aid rules. By aligning credits more closely with health status rather than age, we improve the efficiency of the scheme.

I commend the Bill to the House.

See this speech in context