Written answers

Tuesday, 1 October 2013

Department of Health

Health Insurance Levy Issues

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
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616. To ask the Minister for Health the percentage of Government health levy that applies to all private health insurance policies; if this levy only applies to those paying private health insurance; and if he will make a statement on the matter. [41075/13]

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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Risk equalisation is a mechanism designed to support the objective of a community rated private heath insurance market, whereby all customers pay the same amount for the same health insurance policy, irrespective of age, gender or health status. An effective and robust Risk Equalisation Scheme, RES, is required in order to protect affordability for those who need it most. The Health Insurance (Amendment) Act, 2012 introduced a new permanent RES for the private health insurance market, effective from 1 January, 2013. I assume that the Deputy is referring to the stamp duty applicable under RES 2013.

The Risk Equalisation Scheme provides that health insurers receive higher premiums in respect of insuring older people, but that older people receive RE credits equal to the amount of the additional premium, so that all people continue to pay the same amount for a given health insurance product. These credits are funded by a stamp duty payable by open market insurers in respect of each insured life covered. Each year, the Health Insurance Authority, HIA, prepares the Report of The Health Insurance Authority to the Minister for Health, in accordance with Section 7E (1)(b) of the Health Insurance Acts, 1994 – 2012. These reports set out the HIA’s evaluation and analysis of information returns supplied by insurers, together with its recommendations for Risk Equalisation Credits and associated Stamp Duty to apply for the following year. The most recent report was produced in November 2012 in advance of the introduction of the current permanent scheme.

The rates that apply are not percentage based. Instead a flat rate of €290 for lower cover or non-advanced plans and €350 for higher cover or advanced plans applies to all policies. It is important to note that the measures contained in the RES are designed to result in no overall increase of premiums paid in the market. Its purpose is to spread the risk more evenly between the healthy and the less healthy, as well as the old and the young and to target credits where they are needed most, i.e. to the older and less healthy members. It should also be noted that the levy is placed on private health insurance providers for each insured individual, and not on the customers themselves. Later this month, the HIA will submit its report to the Minister with recommendations in respect of revised Risk Equalisation Credits to apply from 1 January 2014.

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