Minister Reilly announces changes to Risk Equalisation Credits to protect community-rated health insurance for all

The Minister for Health Dr. James Reilly TD today (12 November 2013) announced changes to risk equalisation credits that will apply in the private health insurance market from 1st March next.

Risk equalisation is a vital support to community rating – a core principle of the Irish private health insurance market – which means that everyone pays the same price for the same product, regardless of age or health status. This helps to make sure that health insurance is as affordable as possible for older and less healthy customers.

Minister Reilly said:

“I am determined to protect community rated health insurance as a vital part of our health system. We need community rating now, and we will need it in the future as we move to Universal Health Insurance.”

Under the Health Insurance Acts, the Minister for Health sets the rates for risk equalisation credit and the Minister for Finance sets the rate of stamp duty required to fund those credits.

Different risk equalisation credits apply to ‘advanced’ and ‘non-advanced’ health insurance policies. Minister Reilly has proposed no change to the credits (and consequently stamp duty payable) on lower cost ‘non-advanced’ health insurance – helping 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.

Minister Reilly said:

“Given the cost pressures many households face, I was very reluctant to recommend increases on stamp duties at all, even for products providing ‘advanced’ cover. However, my priority is to direct support where it is most needed and these revised risk equalisation credits will subsidise health insurance for our most vulnerable patients.

Minister Reilly is committed to improving the effectiveness of the permanent risk equalisation scheme that he introduced last year The Health Insurance (Amendment) Act, 2012 introduced a permanent risk equalisation Scheme (RES) in the Private Health Insurance Market, with effect from 1 January, 2013., and these changes contribute to that goal. The new risk equalisation credits will compensate for:

· 78% of the higher claims costs of people in their 70s (up from 75% this year); and

· 86% of the higher claims costs of those in their 80s (up from 83% this year).

Minister Reilly said:

“I want the private health insurers to be ready for Universal Health Insurance (UHI), which will provide a single tier health system, based on the key principles of fairness, affordability, choice and equal access for all. The steps I am taking today continue the path to UHI by protecting community rating through enhanced risk equalisation and by promoting a sustainable market for competitive health insurance.”

Finally, the Minister said that he will continue to work to address unacceptably high costs in the private health insurance sector. He will shortly receive an independent report from Pat McLoughlin, who he appointed this summer as Chair of the Consultative Forum on Private Health Insurance, which will make recommendations on addressing high costs in the industry. It is critically important that private health insurers take all action necessary to drive down high costs in the Irish healthcare sector, in a well regulated and competitive market. Minister Reilly is committed to working with all insurers to achieve real cost reductions that will benefit consumers.