Mary Harney (Dublin Mid West, Independent)
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VHI announced price changes in relation to a range of its plans on 6 January 2011, which will take effect on 1 February 2011. I am very disappointed at the decision of the VHI to increase its prices so significantly. There is no doubt that the increases will make it harder for those who benefit most from health insurance to renew their policies.

As Minister for Health and Children I have responsibility for governance matters relating to the VHI, such as Board appointments and the receipt of its annual report and accounts. While owned by the State, VHI is a not-for-profit company operating in a competitive market. I strongly believe it would be inappropriate for any Minister to interfere in matters relating to prices set by any one company which is required to compete fairly within that market.

I want to ensure, however, that everyone is aware of the various alternative health insurance policies on offer. It is important to stress that customers have a legal right to switch between or within insurers to get better value, including better cover or to reduce their premium costs. It is not open to a company to refuse a customer of another insurer the same level of cover. The Health Insurance Authority (HIA) provide advice on switching by telephone or via the internet and I would urge any consumers with concerns to contact the HIA. I have asked the HIA to monitor the situation closely to ensure that all customers are given accurate information about their right to switch policies, without penalty. The HIA will play an important role for customers, both in ensuring that they have accurate information, and in monitoring the implementation of the law protecting consumers in relation to health insurance.

I am committed to protecting our community-rated market through risk equalisation. A system of risk equalisation is particularly necessary in the Irish market because, for historical reasons, the VHI has a greatly disproportionate share of older customers, as is evident from the fact that is has 80% by value of all claims in the market but only 62% of all customers.

The Government had a risk equalisation scheme in place but following a challenge by BUPA, the scheme was struck down by the Supreme Court in July 2008. In response the Government introduced a temporary scheme of tax relief/community rating levy in January 2009 which provides a very significant degree of support for the cost of health insurance claims by older people. It allows insurers with additional costs arising from insuring older people, to be compensated for up to, but no more than, 65% of these additional costs. This was increased from a figure of 50% in 2009 and 2010 following advice from the Health Insurance Authority.

The Government is also preparing to put in place a risk equalisation scheme that will 'equalise' risk as far as is possible on age, health status and gender grounds. The scheme is designed to be legally robust and to be fully in accordance with European and Irish law requirements. The Health Insurance Authority has completed its consultation process on risk equalisation and submitted its analysis and recommendations to me on 23 December 2010. I am currently considering this report and I intend to prepare legislation for a transitional scheme which will come into effect in 2012 and a risk equalisation scheme to come into effect at the start of 2013.