Catherine Byrne (Dublin South Central, Fine Gael) | Oireachtas source

I wish to pass on the apologies of the Minister for Health, Deputy Simon Harris, who cannot be here. I thank Senator Devine for the proposed amendment. The cost of private health insurance is influenced by a number of factors, such as the number of persons in the market, the age profile of those holding private health insurance and ongoing medical innovations. Each of these are contributors to the cost of care and the cost of claims, and therefore contribute to the cost of premiums payable. Health care usage is strongly linked with age. The ageing of the population has implications for health care policy generally and can directly impact health insurance premium prices.

This is why we have a risk equalisation scheme in the health insurance market, whereby credits are paid to all insurers to take account of the older and sicker members on their books. These credits are funded directly by stamp duty levies on all health insurance contracts. The scheme redistributes funds between insurers to meet some of the additional costs of insuring older and sicker members.

A crucial point is that all of the moneys collected from the stamp duties are transferred to a fund administered by the Health Insurance Authority and redistributed back to the health insurance companies by way of credits in respect of older and sicker people. None of the stamp duties on each health insurance contract goes to the Government. They are all redistributed to compensate for the additional cost of insuring older and less healthy people. Health insurers have often cited increases in stamp duty rates as being one of a number of different contributors to the cost of health insurance premiums. However, it is not the case that any increase or decrease to the rates of stamp duty automatically lead to an increase or decrease in the cost of health insurance premiums.

The other contributory factors to costs which I have mentioned are also taken into consideration in the commercial pricing decisions taken by each insurer when setting their product prices. I mentioned already that the total amount collected in stamp duty from insurers equals the total amount of credits paid to insurers. If the amount of stamp duty collected was higher than the credits paid then the scheme would be inflationary for the market. Conversely, if the stamp duty collected was lower than the credits paid, temporary funding would be required from the Exchequer. This is where the role and expertise of the Health Insurance Authority is particularly relevant. Taking into account market trends, each year the authority is able to accurately predict the total cost of credits and the stamp duty rates required to fund them.

As part of its evaluation and analysis of the market, the Health Insurance Authority already provides information on premium inflation in the market. The most recent information provided by the authority, for the 12-month period ending in June 2017, shows that the average gross premium paid by consumers was €1,188. This represents a 2% increase on the average premium paid in the 12 months prior to June 2016, when the figure was €1,164. Given that the Health Insurance Authority already has an ongoing role in the evaluation and analysis of market information including premium inflation, on behalf of the Minister I decline to accept the proposed amendment. We believe it is not necessary, and therefore we will reject it.