Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I thank Senator Barrett. It is widely accepted that community rating, which is the cornerstone of private health insurance in Ireland, cannot survive without risk equalisation. This was the justification for the Minister for Health, Deputy Reilly, introducing on a permanent basis the risk equalisation scheme for the Irish market late last year. The Health Insurance (Amendment) Act ensures that in the interests of societal and inter-generational solidarity the burden of the cost of health services is shared by insured persons by providing for a cost subsidy between the more healthy and less healthy, including between the young and the old. The risk equalisation credits are funded through a stamp duty levy payable by open market insurers in respect of each insured life, and thus ensures that the scheme is self-financing. It is something of a circular flow - the money comes in and it is given back to them for the purpose of equalising the risk. That is my understanding.

The rates recommended by my colleague Minister for Health, Deputy Reilly, and approved by the Minister for Finance, Deputy Noonan, are set out with the sole aim of providing the necessary funding for risk equalisation credits while not incurring a deficit or surplus in the scheme. The specified rate for the period 1 January to 30 March, inclusive, is maintained at 2012 rates to allow insurers time to trade in to the new scheme.

The combined effect of Senator Barrett's recommendation would be that no health insurance levy would be payable in 2013. Presumably, this ties in with some of his earlier recommendations to section 15, whose object was that the permanent risk equalisation scheme would not come into effect until the scheme is under the control of the Central Bank. However, the scheme is already in place by virtue of the Health Insurance (Amendment) Act which was introduced late last year and provides that no levy is payable in 2013. The recommendation would mean there would be no funds available to pay the risk equalisation credit which was introduced via the Act of last year. Once the Act was in place there was a corresponding responsibility to collect revenue to fund what is required in this circumstance.

Senator Barrett has put forward a novel and interesting proposal which we may need to consider more closely in the fullness of time, because it is effectively introducing the same rate of tax throughout the whole system. One would have to do some type of actuarial analysis to determine whether the funds raised from that would help to fill any deficit in any of the insurance companies over a period of years. We will consider it more closely but for our purposes today we must remain loyal to the section and to the intention of the section, which is to provide the funds necessary for risk equalisation.