Bernard Durkan (Kildare North, Fine Gael)
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Question 62: To ask the Minister for Health and Children the cost of health insurance over each of the past seven years and to date in 2010; the degree to which competition in the market has assisted the consumer; the extent to which community rating or regulation has resulted in economic efficiencies and or benefits to the consumer; the degree to which health insurance costs relate to the public and private hospital sectors; the extent to which the various health insurers have catered for or continue to cater for the various age groups and profiles; the extent to which it has become obvious as to the contributory causes to rising health insurance costs; the most obvious contributory factors; her plans to deal with the issues arising; and if she will make a statement on the matter. [6835/10]

Mary Harney (Dublin Mid West, Independent)
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Each private health insurer offers a wide range of different policies and plans. There are about 184 different health insurance plans now on the market with different prices reflecting different costs incurred under these plans. Plans are also constantly evolving to meet different market conditions. Health insurance prices can be affected by a range of economic considerations including the costs of health care services and other costs and may also reflect the age profile of the customers in any insurer's customer base. In addition, each private health insurance provider is free to choose their own service providers and price negotiations are a matter between each insurer and their chosen service providers.

As Minister for Health and Children, I have no role to play in the day to day running of and commercial decisions relating to private health insurers. In addition, I have no role to play in the setting of prices by any of the private health insurance providers. This is a commercial decision for each insurer. The private health insurance market in Ireland operates under the principles of community rating (whereby all persons pay the same price for the same product, irrespective of age or health status), open enrolment (whereby no individual can be refused private health insurance by virtue of age or health status) and intergenerational solidarity (whereby in order to support the principal of community rating, younger people generally pay more for their cover in relation to market average cost, so that cover for older persons and those with ill health is not priced in relation to the risk they pose over the market average cost).

Following the decision of the Supreme Court in 2008 that the Irish risk equalisation scheme was ultra vires, measures needed to be put in place to ensure that the principle of community rating was supported. The interim scheme provided for in the Health Insurance (Miscellaneous Provisions) Act 2009 consists of an age-related tax relief which is funded by a levy placed on the private health insurance companies.

The Government's clear policy objective is that health insurance should remain affordable to a large number of people, particularly to older people and people suffering ill health. To this end, community rating must be the cornerstone of the Irish health insurance market. The viability of the system relies on the effective operation of solidarity between different generations through which the young subsidise the healthcare costs of the elderly and are subsidised in their turn by the following generation. Health insurance should not be risk-rated for increasing age, medical status or claims history. It is therefore clear that this policy has made private health insurance reasonably affordable for older people and people with ill health. In a risk-rated market this would not be the case.

Sustaining community rating requires a legally and financially robust system of risk equalisation to ensure cross-subsidisation across the entire market, not just within each company's cohort of customers or among the holders of each health insurance contract. Work is now underway to replace the temporary levy and tax relief arrangement with such a robust system of risk equalisation. The reasons for increased health insurance costs include new technologies, additional hospital capacity and demographic change. The vast majority of costs incurred by insurers are in the hospital sector.

With regard to the extent to which insurers have catered for or continue to cater for the various age groups and profiles, there are a number of issues which have been underpinned by legislation. Firstly, the principle of open enrolment ensures that no individual can be refused private health insurance. The principle of community rating ensures that no individual can be charged more than another for the same product due to their age or health status. The Health Insurance Acts also provide for the introduction of new regulations which will incentivise younger people to take out private health insurance early in life. These Lifetime Community Rating regulations are now in preparation and will be in place by mid-2010. Existing private health insurance legislation, the interim scheme which is currently in place and the Government's commitment to put in place a robust risk equalisation scheme seek to mitigate against disincentives for insurers to provide private health insurance to older people and those with ill health.

The principal objective of the Health Insurance Acts 1994 - 2009 aims to protect community rating and to ensure that private health insurers do not engage in product design which has the effect of excluding particular cohorts of customers. The Health Insurance Authority (HIA) monitors such issues and it is clear that without a robust risk equalisation scheme there will always be incentives for insurers to find ways of segmenting the market. The Government is fully committed to the implementation of such a robust scheme. I have raised the full issues relating to the private health insurance market with the Government and I expect that decisions will be made in the first quarter of this year.