James Reilly (Dublin North, Fine Gael)
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Question 104: To ask the Minister for Health and Children her plans to replace the health insurance levy scheme with a risk equalisation scheme; the timeframe for same; and if she will make a statement on the matter. [42454/09]

Mary Harney (Dublin Mid West, Independent)
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Following the Supreme Court Decision of July 2008 which found the Irish Risk Equalisation Scheme to be ultra vires the Health Insurance Acts, I asked the Health Insurance Authority (HIA) to provide advice on how to support the operation of community rating in the interests of consumers in the changed circumstances. The HIA advised that the alternatives were either to reconstitute the Risk Equalisation Scheme in some form or to introduce some form of levy based or tax based loss compensation system.

I decided to introduce such an interim scheme and this was provided for under the Health Insurance (Miscellaneous Provisions) Act 2009, covering the period 2009 to early 2012, when some payments will be made under the Act. The HIA has commenced work in relation to drafting a comprehensive risk equalisation / loss compensation system to replace these interim measures when they expire.

The HIA, the Department and I recognise the importance of putting this scheme in place to safeguard the principal of community rating, which is essential to the operation of the health insurance market in Ireland. In any community rated market, a comprehensive risk equalisation or loss compensation system is required in order for the market to operate in the best interests of all consumers. Without a risk equalisation or loss compensation system, insuring older or ill people will be loss making. As a result, insurers that cover a higher proportion of older people will be at a significant competitive disadvantage and insurers will seek to avoid insuring older people. It follows that, without risk equalisation or loss compensation, competition will not function properly and the market will operate counter to the interests of ill and older people. This is why it is the international norm for risk equalisation or loss compensation to apply in community rated markets.