Ned O'Keeffe (Cork East, Fianna Fail)
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Question 109: To ask the Tánaiste and Minister for Health and Children if her attention has been drawn to the serious consequences for 250 jobs in County Cork if risk equalisation in the health insurance market is introduced; if a company (details supplied) does not remain here the way in which the remaining health insurance company will raise the additional funds it says it requires under risk equalisation. [23600/05]

John Perry (Sligo-Leitrim, Fine Gael)
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Question 123: To ask the Tánaiste and Minister for Health and Children the reason subscribers of a company (details supplied) should be unfairly and unjustly treated with regard to the proposed introduction of the system known as risk equalisation which she plans on putting into place; and if she will make a statement on the matter. [23789/05]

Pat Breen (Clare, Fine Gael)
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Question 125: To ask the Tánaiste and Minister for Health and Children if she proposes to introduce the system known as risk equalisation for customers of a company (details supplied); if so, the reason the money has to be paid to the VHI and the ESB; and if she will make a statement on the matter. [23792/05]

Richard Bruton (Dublin North Central, Fine Gael)
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Question 194: To ask the Tánaiste and Minister for Health and Children her views on whether new entrants to the health insurance market have yet obtained sufficient market share to be able to carry the cost of contributions to the risk equalisation fund; and her further views on whether the extra cost will force up premiums for customers and risk damaging the emergence of long-term competition to the VHI. [24023/05]

Mary Harney (Dublin Mid West, Progressive Democrats)
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I propose to take Questions Nos. 109, 123, 125 and 194 together.

The Deputies will be aware that I decided, on balance, recently not to trigger risk equalisation payments in the health insurance market at this point in time. I reaffirm, however, the Government's commitment to recourse to risk equalisation as an essential support to maintaining the common good principle of community rating in our voluntary health insurance market and its recognition that provision for the operation of risk equalisation is concomitant to the policy of a community rated health insurance market.

Risk equalisation is a process that aims to equitably neutralise differences in insurers' costs that arise due to variations in the health status of their members. Depending on the extent of the variation, risk equalisation may result in cash transfers from insurers with lower risk members to insurers with higher risk members. EU Council Directive 92/49/EEC, the third non-life insurance directive, allows for specific legal provisions to be adopted in the interests of the common good in the field of voluntary private health insurance, including measures relating to risk equalisation between insurers. When the regulatory framework was being developed, the EU internal market directorate general determined that Ireland was entitled to adopt such provisions to protect the common good, including community rating, open enrolment, lifetime cover and risk equalisation, subject to the principles of necessity and proportionality.

Both the principle and detail of providing for risk equalisation in the Irish voluntary health insurance market have been the subject of widespread consultation, analysis and extensive examination over a number of years. In addition to consultations carried out by my Department in the matter, the process has involved assessment of the issue by authoritative independent bodies, both nationally and internationally, and by EU Commission services.

Recourse to risk equalisation has been, and is, a feature of the market since enactment of the Health Insurance Act 1994. The original 1996 risk equalisation scheme was signed into law in March 1996. It was revoked in 1998 in the context of the preparation of a White Paper on private health insurance and in the clear understanding that it would be replaced. Following widespread public consultation the 2001 Health Insurance (Amendment) Act amended the risk equalisation provisions contained in the 1994 Act, principally, as follows: the enhancement of the role of the independent Health Insurance Authority and revision of the criteria by which risk equalisation would have been triggered — under the previous scheme an automatic triggering applied when the market equalisation percentage exceeded 2%.

In January 2003, the Irish authorities formally notified the EU Commission of the scheme now in place. The Commission notified the Irish authorities in May 2003 that it had decided not to raise objections to the scheme on state aid grounds. This decision is being appealed by BUPA to the Court of First Instance.

The provisions of the health insurance Acts provide that in considering whether risk equalisation transfers are warranted, the best overall interests of health insurance consumers include a reference to the need to maintain the application of community rating across the market for health insurance and to facilitate competition between undertakings. Any decision on the commencement of risk equalisation will not, therefore, be taken by reference to the specific insurance undertakings. The position regarding new entrants to the market is that they enjoy a three year exemption from risk equalisation payments. In addition, any liability in the fourth year is limited to 50% of that which would have been due in the normal course. It is not accepted that risk equalisation, if introduced, would be either unfair or unjust.