James Reilly (Dublin North, Fine Gael)
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Question 144: To ask the Minister for Health and Children the specific measures she is considering to keep health insurance for older people affordable; and if she will make a statement on the matter. [41795/08]

Mary Harney (Dublin Mid West, Progressive Democrats)
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A primary objective of Government policy in health insurance is that it should be affordable for the broadest possible cross section of the community including older people and those who suffer ill-health. This policy objective has been implemented through a substantial body of primary and secondary legislation providing for open enrolment, community rating and lifetime cover. Following the liberalisation of the market in 1994 every political party and successive governments have supported the maintenance of community rating. It is an inescapable fact, supported by international evidence, that community rating cannot be sustained without some scheme to support the higher claims costs of older or sicker people

Although the Supreme Court found the particular Risk Equalisation Scheme to be ultra vires, it did not strike down the principle of applying risk equalisation or any of the other important elements of the regulatory framework that supports private health insurance in Ireland. After the Supreme Court decision which struck down the Risk Equalisation Scheme on July 16th last, there was a real risk that older people would effectively face significantly higher premium costs than younger people.

Accordingly, on the joint proposal of the Ministers for Finance and Health and Children, the Government has decided to put forward two major steps as interim, three-year measure to stabilise the health insurance market.

There will be additional tax relief for health insurance starting for people aged 50 and over and increasing for higher age groups as follows:

50-59: €200;

60-69: €500;

70-79: €950;

80+: €1,175.

Given this, existing legislation will be amended to allow for community rating to be applied on net premia, with regard to this scheme.

Legislation will also be introduced to provide for the introduction of a Community Rating levy on health insurance companies in respect of all individuals covered by the health insurance policies issued by them, priced as follows:

€160 for each adult;

€53 for each child (under 18).

The levy will apply to all policies from 1 January 2009 and subsequent years. The obligation to pay the charge will be imposed on the health insurance companies. It will be a matter for the companies (based on their individual commercial considerations) as to whether, and to what extent, they pass the cost of the charge on to their customers.

The implementation of these measures is subject to approval by the European Commission. A formal submission has been made to the Commission.

Older people will benefit by the price of their policies not rising massively based on their age. But it is not just older people who will benefit. Those under 50 who look forward to continuing their health insurance as they get older need to know it will continue to be affordable, and will not rise in price just because they get older.

By supporting the principle of intergenerational solidarity, younger subscribers will benefit from affordable health insurance as they in turn become older. Our society benefits from having clear, explicit measures to support solidarity between the generations in health insurance.

The Government hopes and expects that the health insurance industry will respond to this initiative by continuing to market community rated products which meet the health needs of all segments of the population.