Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Senator for his contribution. Community rating is a fundamental cornerstone of the Irish health insurance market. Everyone is charged the same premium if they have a particular health insurance plan, irrespective of age, gender, genetics or the current or likely future state of their health. This means that the price of health insurance for all persons reflects the principle of intergenerational solidarity that the entire community of insured persons should contribute towards the higher cost of claims of older people and less healthy people.

In a risk-rated market which is being suggested here, at least in part, insurers would charge higher premiums to higher risk individuals and lower premiums to low risk individuals. To adopt an approach along those lines whereby insurers could reduce premiums for some people who avoid certain activities, with known negative health affects, would undermine and dilute the existing system of community rating. I appreciate that all Senators spoke in favour of community rating in principle. It is worth pointing out that, in so far as I understand it, South Africa and the United States do not have community rating; it is very much risk-rated. I think I am correct in saying that Senators are not proposing that model but are proposing that premiums should be higher for certain modifiable behaviours and so on, such as smoking, taking exercise or obesity. There may well be some merit in it but I would be very careful about departing from community rating in any way without thinking it through and knowing exactly how we would do it.

One Senator said that it would be easily verified. I am not sure how easy it is to verify it. For example, what test would the insurer perform on its customer to see if he or she is not smoking? Would it carry out alcohol-blood level tests? Would it take hair samples to check what drugs a person may have taken? Would the insurance company start weighing people and doing a BMI and call people back a few months later to check whether their BMI had gone down a little? Would it put pedometers or some type of electronic tag on customers to check whether they are getting the right type of exercise? I am not sure it is verifiable and, therefore, it is an issue that needs to be thought out much better before I could it. The nature of insurance is that the premiums that come in have to slightly exceed the claims. Therefore, any proposal to reduce premiums for anyone must also mean an increase for others.