Michael Lowry (Tipperary North, Independent)
Link to this: Individually | In context

Question 265: To ask the Minister for Health and Children her views on the outcome of a recent High Court case regarding risk equalisation; and if she will make a statement on the matter. [41254/06]

Michael Lowry (Tipperary North, Independent)
Link to this: Individually | In context

Question 266: To ask the Minister for Health and Children the measures she has planned in the event of a retraction in the level of competition in the health insurance market; and if she will make a statement on the matter. [41255/06]

Mary Harney (Dublin Mid West, Progressive Democrats)
Link to this: Individually | In context

I propose to take Questions Nos. 265 and 266 together.

Private Health Insurance is an integral part of the Irish health care system covering over half of the population. It has, for nearly 50 years, played a major role in the financing of our health services. There is considerable support for community rating as a fundamental principle of the health insurance market in Ireland. This principle, together with lifetime cover and open enrolment, guarantees an equitable non-discriminatory regulatory framework for voluntary private health insurance, and compares favourably with private health insurance systems found elsewhere.

This Government is intent on supporting genuine competition and development in the private health insurance market. However, in the first instance consideration has to be given to the stability of the community rated health insurance system, and the safeguards provided to protect it, such as risk equalisation. The ultimate beneficiary of risk equalisation is the insured population, particularly the elderly and the ill, who would otherwise be vulnerable to the effects of risk selection, and would find the cost of private health insurance unaffordable at the point in their lives when it was needed most. A market without the balancing measure of risk equalisation to address the effect of mandatory community rating exposes insurers with higher risk members to spiralling claims and ultimately threatens their viability while opening the possibility of super-normal profits being made by other insurers, at the expense of consumers and the insured community as a whole.

Risk equalisation will not over-compensate any insurance undertaking for the share of the total community of sick and elderly it serves, and is neither disproportionate, a cause for any distortion of competition in the market place, nor does it constitute State Aid. Risk Equalisation is about compensating for differential risk profiles. It is not about transferring profits. It is about ensuring that competition takes place on an equitable basis.

The Competition Authority and the Health Insurance Authority are examining the health insurance market and are to bring forward recommendations on how greater competition could be encouraged in this market. Their joint report is expected early in 2007. It is the Government's view that the regulatory framework for private health insurance, including the provision for risk equalisation, is appropriate. This position has been endorsed by the High Court. While the Government accepts that the framework influences the market environment, it does so for a good reason, namely, the protection of the consumer and in the interests of the common good.