Emer Higgins (Dublin Mid West, Fine Gael) | Oireachtas source

On behalf of the Minister for Health, Deputy Jennifer Carroll MacNeill, I am pleased to have this opportunity to address the House on the Health Insurance (Amendment) Bill 2025. This is an annual, technical Bill with eight sections, focused on the specific area of health insurance. It also seeks to make a change to the term of appointment of the chairperson of the Health Insurance Authority.

The Bill was published on 18 November and concluded its passage through the Dáil on 26 November. The Minister welcomes the support received in the Dáil for the Bill and the core principle of community rating, which is long-established and well-supported Government policy for the health insurance market. Today, 46% of the population - 2.54 million people - holds private health insurance. This represents an annual premium income of approximately €3.8 billion. Health insurance in Ireland is built on four key principles and I will briefly outline all four.

First, open enrolment means that anyone can buy a health insurance policy at any time, regardless of age, health status or medical history. Insurers cannot refuse cover because someone is older or has an illness.

Second, lifetime cover means that once you have health insurance, you can keep it for life, provided you pay your premiums. Insurers cannot cancel your policy because you become sick or in the event of making claims.

Third, minimum benefit means every policy must include a basic level of cover, set by law. This ensures that all customers receive a minimum standard of benefits.

Fourth, the commitment towards community rating means that everyone pays the same price for the same plan, regardless of age or health. Insurers cannot charge more because someone is older or has a medical condition.

These four principles are the foundation of fairness in our health insurance system. The risk equalisation scheme is a key mechanism that keeps our health insurance market fair and sustainable. In a community-rated market, everyone pays the same price for the same policy, regardless of age or health. Older or sicker people, who may cost more to insure, do not pay more. Without the support of risk equalisation schemes, insurers with more high-risk customers would face higher costs and higher premiums. In fact, premiums could rise quite sharply.The risk equalisation scheme helps to resolve this. It works by redistributing funds between insurers. Insurers who cover older and sicker members receive credits to offset their higher costs. These credits are funded by stamp duty paid by the insurer for each health insurance policy it issues. The Office of the Revenue Commissioners collects the stamp duty and transfers it to the risk equalisation fund, which is managed by the Health Insurance Authority, HIA.

There are three types of credits in the risk equalisation scheme. The first type is age-related credits, which are payments to insurers to help cover the higher cost of insuring older customers. Older people generally use more healthcare services, so their claims cost more. Without these credits, insurers with more older members would face higher costs and would likely pass these on to their members in higher premiums.

The second type is hospital utilisation credits, which compensate insurers when their members use hospital services, either for overnight stays or day cases. They help spread the cost of hospital care across the market. The third is high-cost claims credit, which is for very expensive claims. If a claim goes above €50,000 in a year, part of that cost is covered by the risk equalisation fund. This protects insurers from the impact of extremely high claims and keeps premiums stable. This Bill makes changes to all three risk equalisation credits. The proportion of age-related credits will decrease slightly, while health-related credits will increase by the same amount. Age is not always an indicator of bad health, so this change better aligns credits with actual health status.

Health insurance policies fall into two categories, advanced and non-advanced. Non-advanced contracts mainly cover treatment in public hospitals. They provide a more basic level of cover and are generally less expensive. Advanced contracts, on the other hand, offer a higher level of cover, including access to private hospitals and additional benefits. These plans cost more because they provide greater choice and flexibility for customers. There are four different rates of stamp duty, depending on whether the policy is advanced or non-advanced and whether the customer is an adult or a child. The rates for non-advanced policies and children are lower, reflecting lower levels of claims.

While increases to stamp duties may affect insurance premium costs, stamp duty is a ring-fenced contribution to the risk equalisation fund and supports the credits to enable fairness and sustainability in the private health insurance market. In addition, stamp duty is not automatically applied to each health insurance premium. Insurers decide how to build it into their pricing structures across their portfolio of policy types.

Each year, credits and stamp duties are updated to reflect changes in claims and costs. Medical inflation and private hospital costs are driving claims higher. Medical inflation simply means the amount by which the cost of healthcare is rising every year. Hospitals charge more for procedures as a result. New treatments and technologies are more expensive, and wages and operating costs continue to increase. Even if the number of claims stays the same, the cost of those claims goes up. This is one of the main reasons risk equalisation credits and stamp duties need to increase. The annual changes help to keep the system fair and sustainable. If the Government does not adjust the stamp duty rates every year, the scheme could run out of money. This could mean even higher increases to stamp duty later on or the Government having to step in to fund the scheme directly.

There is strong public support for community rating in private health insurance. The Health Insurance Authority carried out a survey this year, which showed that 64% of those surveyed agreed that health insurance prices should not depend on an individual’s health condition and 72% agreed that older people should not pay more for their health insurance.

I will now briefly outline the sections of the Bill. Section 1 confirms that the principal Act is the Health Insurance Act 1994. Section 2 sets 1 April 2026 as the date when the new credits from the risk equalisation fund will take effect. Section 3 updates the term of appointment for the chairperson of the Health Insurance Authority, bringing it in line with the code of practice for the governance of State bodies.

Section 4 increases the hospital utilisation credit, from April 2026. This means that overnight stays will rise from €163 to €165, while day cases will rise from €81 to €100. Section 5 revises the age-related credits. These credits depend on age, sex and level of cover. They will increase for all advanced products and most non-advanced products to reflect the higher number and cost of claims.

Section 6 strengthens the high-cost claims pool credit, which helps insurers cover very expensive claims. The share of costs covered will rise from 45% to 50%, for claims over €50,000 in a 12-month period.

Section 7 sets out the new stamp duty rates to fund these credits. From 1 April 2026, adult advanced plan stamp duty is going up by €48 to €517; child advanced plan stamp duty is going up by €16 to €172; adult non-advanced plan stamp duty is going up by €9 to €103; and child non-advanced stamp duty is going up by €3 to €34. These increases are calculated to keep the scheme Exchequer-neutral. An €8 million surplus in the fund will be used to reduce the level of stamp duty that would otherwise apply.

Section 8 deals with the Short Title, commencement and construction of the Bill.

In summary, this Bill ensures the continued fairness of our community-rated health insurance market. It strengthens the risk equalisation scheme and supports affordable premiums for older and sicker people, principles which are backed by the public. These amendments achieve our objectives in three ways. First, they support the sustainability of the private health insurance market by ensuring that credits and stamp duties reflect the real cost of claims. This keeps the risk equalisation fund balanced and avoids sudden shocks to premiums. Second, they prevent overcompensation to insurers. The changes to age-related and health-related credits are carefully calibrated so that insurers receive fair support from the fund. Third, they maintain fair and open competition, in line with EU state aid rules. By aligning credits more closely with health status rather than age, we improve the efficiency of the scheme.

I thank all the officials in the Department of Health who have worked so hard on this and I commend this Bill to the House.