Bernard Durkan (Kildare North, Fine Gael)
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187. To ask the Minister for Health if, in the context of private health insurance, efforts have been made to encourage all insurers to take on a cross-section of the age cohort thereby preventing advantageous trading by any insurer; and if he will make a statement on the matter. [48545/13]

James Reilly (Dublin North, Fine Gael)
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I am conscious of the need to ensure that there is a fair and balanced private health insurance market in Ireland. The Health Insurance Acts 1994 to 2012 provide the statutory basis for the regulation of the health insurance market in the interest of the common good. At the centre of the common good in a community-rated health insurance market is inter-generational solidarity between all insured persons. Under community rating, everybody is charged the same premium for a particular health insurance plan, irrespective of age, gender and the current or likely future state of their health. The objective has always been that the price of a policy should reflect the risks and costs of the entire pool of insured persons in the community, rather than the risks and costs on a person by person basis and indeed on an insurer by insurer by basis.

The pricing of risk across the community of insured persons requires robust mechanisms to share costs when there are a number of insurance companies in the market. If a mechanism to share risk and attendant costs is not present, an insurer with a less profitable risk profile can quickly find themselves in a perilous position financially. The standard transfer mechanism is known as risk equalisation and it is a key element of health insurance, not just in Ireland but internationally. Risk equalisation is a process that aims to equitably neutralise differences in insurers’ claim costs that arise due to variations in the health status of their members. The aim of risk equalisation is to look at the market as a whole, and to distribute fairly the differences that arise in insurers’ costs due to the differing health status of all of their customers. Risk equalisation aims to make health insurance more affordable for older people by supporting community-rated premiums. In general, younger people pay more and older people pay less than what would normally apply in a risk-rated system.

I am committed to progressively increasing the extent to which risk equalisation compensates for the costs of insuring older customers. A permanent Risk Equalisation Scheme (RES) was introduced with effect from 1 January, 2013. Prior to the introduction of the permanent RES, an Interim Scheme of Age-Related Tax Credits and Community Rating Levy had been in operation from 2009 to 2012. Yesterday I received Government approval to the immediate publication of the Health Insurance (Amendment) Bill 2013, which sets out revised risk equalisation credits and the corresponding stamp duties that will apply under the Risk Equalisation Scheme from 1 March 2014. Different risk equalisation credits will apply to 'advanced' and 'non-advanced' health insurance policies. There will be no change to the stamp duty payable on lower cost 'non-advanced' health insurance, which will help to ensure that the option of lower cost health insurance remains available. The stamp duty for health insurance products providing 'advanced' cover will increase from €350 to €399 per adult and from €120 to €135 per child. This will help direct support, in the form of higher risk equalisation credits, where it is needed most and will subsidise health insurance for the most vulnerable patients. Under the Health Insurance Acts, I set the rates for risk equalisation credits and the Minister for Finance sets the rate of stamp duty require to fund those credits.

These measures will ensure that we continue to protect community rated health insurance, which is a vital part of our health system, now and in the future as we move to Universal Health Insurance.