Seán Power (Kildare South, Fianna Fail)

I am responding to this Adjournment matter on behalf of the Minister for Health and Children, Deputy Harney. Private voluntary health insurance is an integral part of the Irish health care system, a service of which more than half the population avails. It has, for almost 50 years, played a major role in the financing of our health services and in offering choice to the public. There is widespread support for Government policy establishing community rating as a fundamental principle of the health insurance market. This principle, together with lifetime cover and open enrolment, guarantees affordability of private health insurance for many people and an equitable non-discriminatory regulatory framework for health insurance.

The Government continues to support sustainable competition and consumer choice in the private health insurance market. Alongside this, the Government will also support the stability of the community rated health insurance system and the safeguards provided to protect it, such as risk equalisation. This policy is designed with the express purpose of benefiting the insured population, particularly the elderly and the ill, who would otherwise be vulnerable to the effects of risk selection, and would find the cost of private health insurance unaffordable.

Risk equalisation seeks to remove an insurer's incentive to select preferred risks. It is clear from international health insurance markets that a system of risk equalisation and community rating is not incompatible with viable, ongoing competition. However, a market without the balancing measure of risk equalisation to address the effect of mandatory community rating exposes insurers with higher-risk members to spiralling claims and potential financial distress. Risk equalisation is not designed to over-compensate any insurance undertaking for the share of the total community of sick and elderly. It is about compensating for differential risk profiles rather than transferring profits. Its objective is to ensure that competition takes place on an equitable basis.

In December 2005, the Minister asked the Competition Authority and the Health Insurance Authority to examine the health insurance market and to bring forward recommendations on how greater competition might be encouraged. Their joint report is expected early in 2007. The Government is mindful of ensuring competition to allow consumers the choice to which they are entitled. It is the Government's view that the regulatory framework for private health insurance, including the provision for risk equalisation, is appropriate. This position has been endorsed by the High Court in a comprehensive judgment delivered last week. The written judgment is not yet available and will need to be carefully analysed by all concerned. While the Government accepts that the framework influences the market environment, it does so for a good reason, namely, the protection of the consumer and in the interests of the common good.