Brendan Griffin (Kerry South, Fine Gael)
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Question 228: To ask the Minister for Health his views on the rising cost of private health insurance; the way he plans to tackle the issue of rising health insurance premiums; if there are ways that customers can reduce their health insurance premiums without jeopardising their cover; and if he will make a statement on the matter. [13022/12]

James Reilly (Dublin North, Fine Gael)
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Under Universal Health Insurance, everyone will be insured for health care and the current unfair discrimination between public and private patients will be removed. In the meantime, I am focusing on addressing the problems of the current private health insurance market, where insurers have a considerable financial incentive to cover younger, better risks rather than older, poorer risks. I am particularly concerned that private health insurance is becoming harder to afford, especially for older people, as insurers increasingly tailor their insurance plans towards younger, healthier customers.

I am strongly committed to protecting community rating, whereby older and less healthy customers should pay the same amount for the same cover as younger and healthier people. In order to protect community rating, we need a system of Risk Equalisation which ensures that community rating can survive. We have an Interim Scheme in place since 2009. It is designed to compensate insurers which have older, less healthy customers and therefore higher claims costs, compared to insurers which have younger, less costly customers. It does so by a system of tax credits, based on age, in respect of persons of 60 years and over. Without such a system, community rating cannot survive.

In order to keep down the cost of health insurance for older people, I was pleased recently to increase significantly the age-related income tax credit for insured persons aged 60 years and over, from 1 January 2012. Without this support, health insurers would have had a strong financial incentive to 'segment' the market by offering policies targeted at young people, to the disadvantage of older customers.

I must emphasise that these measures are designed to result in no overall increase of premiums in the market and to spread the risk more evenly between the healthy and the less healthy, the old and the young. The increased tax credits for older people are balanced by a corresponding increase in the levy on each insurer in respect of all of its insured customers, so that the system is Exchequer neutral.

In addition, I am keen to explore other available measures to limit the costs related to health insurance. I met recently with the three commercial health insurers to establish a Consultative Forum on Health Insurance, which met for the first time on 21st February. It agreed to work cooperatively to examine the potential to drive down costs related to health insurance and to identify savings that could be achieved by both public and private hospitals.

I am very concerned that any inefficiency in the management of claims is addressed before the introduction of Universal Health Insurance. The VHI will play a key role in addressing costs in the market, as due to the age profile and health status of its customer base, it currently pays out about 80% of all claims in the market as a whole. A new review of the VHI's claims costs will be carried out to establish what further savings can be made and it is expected that it will contribute significantly to more effective cost control within the private health insurance market.

The Government's clear objective is for the health insurance market to remain as competitive and affordable as possible, as we move towards a new system of Universal Health Insurance. I am determined that the measures outlined above will have a significant impact in containing the level of any future increases in health insurance premiums.