Pádraic McCormack (Galway West, Fine Gael)
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Question 74: To ask the Minister for Health and Children the action she will take to prevent health insurance premiums of older and sicker people from soaring in view of the recent Supreme Court decision to strike down the risk equalisation scheme enacted by herself; and if she will make a statement on the matter. [42530/08]

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 93: To ask the Minister for Health and Children her plans on legislating for risk equalisation; and if she will make a statement on the matter. [42524/08]

Mary Harney (Dublin Mid West, Progressive Democrats)
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I propose to take Questions Nos. 74 and 93 together.

A primary objective of Government policy in health insurance is that it should be affordable for the broadest possible cross section of the community, including older people and those who suffer ill-health. This policy objective has been implemented through a substantial body of primary and secondary legislation providing for open enrolment, community rating and lifetime cover. Following the liberalisation of the market in 1994 every political party and successive Governments have supported the maintenance of community rating. It is an inescapable fact, supported by international evidence, that community rating cannot be sustained without some scheme to support the higher claims costs of older or sicker people.

Although the Supreme Court found the particular risk equalisation scheme to be ultra vires, it did not strike down the principle of applying risk equalisation or any of the other important elements of the regulatory framework that supports private health insurance in Ireland. However, after the Supreme Court decision, there was a real risk that older people would effectively face significantly higher premium costs than younger people. Accordingly, the Government has decided to introduce two measures on an interim three-year basis to stabilise the health insurance market.

There will be additional tax relief at source for health insurance, starting for people aged 50 and over and increasing for higher age groups. People aged 50 to 59 will get tax relief at source of €200, those aged 60 to 69 will get tax relief at source of €500, those aged 70 to 79 will get tax relief at source of €950 and those aged 80 and over will get tax relief at source of €1,175. Legislation will also be introduced to provide for the introduction of a community rating levy on health insurance companies in respect of all individuals covered by the health insurance policies issued by them, priced at €160 for each adult and €53 for each child under 18. The level of the relief will be reviewed annually.

The effect of the measures on the premiums charged for particular policies by individual companies is a commercial decision for the companies themselves, as they set both policy benefits and pricing at the same time. However, they should not in themselves lead to an overall increase in the approximately €1.5 billion in private health insurance premiums paid, as the levy will yield approximately the same amount as the cost of the tax relief at source.

The implementation of these measures is subject to approval by the European Commission. They have been formally notified to the European Commission as a potential State aid, as had been done with the risk equalisation scheme. Older people will benefit as the price of their policies will not rise significantly based on their age. While supporting the principle of intergenerational solidarity, younger subscribers will benefit from affordable health insurance as they in turn become older. The Government hopes and expects that the health insurance industry will respond to this initiative by continuing to market community rated products which meet the health needs of all segments of the population.

James Reilly (Dublin North, Fine Gael)
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When are we going to get the replacement legislation for risk equalisation? In addition, I ask the Minister, through the good offices of the Leas-Cheann Comhairle, to give us a series of examples of how this new initiative, which we mentioned earlier and about which many people are concerned, will work. For example, what is the situation now for Mr. and Mrs. Murphy, aged 72 and for Mr. and Mrs. O'Brien, both in their 40s and their two children under the age of 18? It seems to me there will be additional levies on adults and children which in a four-person family with two children would result in €500 extra in levies. There will be a 20% cut in their tax rebate and they are facing the possibility of a rise in premia if what the Minister was intimating earlier and what the newspapers are saying is true, namely that there is to be a rise in premia. It appears the insurance companies will be getting the rebate at source from the Government and they will also be allowed hike up their premia which seems like a double whammy on the customer and a double gain for the insurers. This seems a little bit odd.

Mary Harney (Dublin Mid West, Progressive Democrats)
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There is no price control on insurance. The Government does not have to approve the pricing proposals of any company in the market. Traditionally it was the case that the pricing policies of the VHI had to be approved by the Government but this all changed as a result of the legislation to move the VHI to a commercial situation and it is in order that this should be a matter for the board and the management of the company, not for ministerial or Government approval.

With respect to the pricing policies of the companies, it is a fact that 52% of our population has private health insurance; in fact it is slightly more at 2.2 million out of 4.2 million or 4.3 million. It has moved upwards. Since liberalisation it has grown from approximately 36% or 37% even though many were of the view that we were at saturation point at that level. The numbers have increased due to a growth in the market, particularly the numbers of young people who have been attracted. In light of the Supreme Court decision, no risk equalisation payments would have transferred to the company that has by far the largest number of older people as subscribers. The claims made by an 80 year old are four times greater than those of a 40 year old and those of a 60 year old are twice those of a 30 year old. lf one company has 320 times more people aged 80 or over compared to another company, clearly that company will have a higher claims experience. The basic plan would have increased from €600 per adult. In the case of Mr. and Mrs. Murphy on the basic plan at €1,200 a year, this would have more than doubled if we did not take this initiative.

With regard to the risk equalisation legislation, the case in court was argued on 13 or 14 grounds and the decision of the court was made with regard to one aspect. The legal advice available to me, the official advice from my Department and the actuarial advice all stated that it will take at least two years to draft the legislation in light of all the issues that have arisen. This is the reason we have come forward with a measure for a three year period while we draft the legislation.

Brendan Howlin (Wexford, Labour)
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I will allow two brief supplementary questions from Deputy O'Sullivan.

Jan O'Sullivan (Limerick East, Labour)
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The Minister clearly believes in equality for all patients in the case of health insurance and for this I applaud her. I ask her to take the step to do the same for all people in the health service and introduce universal health insurance. Even Boston is now moving closer to Berlin so what about Ireland doing so?

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Snap, Deputy O'Sullivan has asked exactly the question I would pose to the Minister. Will she not accept that the same universal provision based on need alone and funded by direct taxation is indeed the best example of true community rating in terms of the provision of health care?

Mary Harney (Dublin Mid West, Progressive Democrats)
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Since the Second World War no country has moved to introduce universal insurance.

Jan O'Sullivan (Limerick East, Labour)
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The Minister could be the first.

Mary Harney (Dublin Mid West, Progressive Democrats)
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It used to be the policy of my party. We have universal access to hospitals in Ireland——

Seymour Crawford (Cavan-Monaghan, Fine Gael)
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Except in Monaghan.

Mary Harney (Dublin Mid West, Progressive Democrats)
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——and we would never get to a situation where some people could not top up their entitlements, even with a universal model in place. If we are talking about paying consultants for the public patients they are currently supposed to see on their salaries and if this is the only element which some would advocate——

Jan O'Sullivan (Limerick East, Labour)
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It is much broader than that.

Mary Harney (Dublin Mid West, Progressive Democrats)
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——then we need to think very carefully. There are also implications for hospitals etc. in a system that is totally funded by insurers. These issues should be examined.

Jan O'Sullivan (Limerick East, Labour)
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Three years.

Brendan Howlin (Wexford, Labour)
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That can happen on another occasion.