Update: Private Health Insurance, 5th August 2015

QUESTION NO:  235

DÁIL QUESTION  addressed to the Minister for Health (Leo Varadkar)
by Deputy Bernard J. Durkan
for WRITTEN ANSWER on 09/07/2015   

 
  *  To ask the Minister for Health the extent to which he and his Department continue to monitor private health insurance with the objective of the continued implementation of lifetime community rating; if he remains satisfied that all insurers incur their fair share of the responsibility to provide for patients across the age spectrum; and if he will make a statement on the matter.

                                                                         Bernard J. Durkan T.D.

 
REPLY.
My Department and the Health Insurance Authority oversee the maintenance of a competitive and sustainable health insurance market, under the provisions of the Health Insurance Acts 1994 to 2014, and monitor developments on an ongoing basis to ensure that the market is regulated appropriately. Community rating is a fundamental cornerstone of the Irish health insurance system. Under community rating, the level of risk that a particular consumer poses to an insurer does not directly affect the premium paid. This means that people who are old or sick do not have to pay more for the same insurance plan than the young and healthy. Insurers are also required to accept all applicants for health insurance, regardless of their health status or age.

For community rating to work we depend on adequate numbers of younger people taking out health insurance to help keep premium prices down for everybody. Lifetime community rating, which came into operation on 1 May 2015,  modifies community rating so that the premium that individuals pay for health insurance increases with the age at which they enter the health insurance market. Late entry loadings now apply for people aged 35 and over when taking out health insurance for the first time. Lifetime community rating encourages people to take out health insurance at a younger age, thereby helping to spread the health costs of older and less healthy people across all insured persons. It is a necessary measure to help support the viability of community rating within our system of health insurance.

An effective and robust Risk Equalisation Scheme is in place to support to community rating by equalising the risk of insuring older or less healthy people across the market. The scheme involves the payment of risk equalisation credits to insurers which are funded by stamp duties levied on insurers, based on all policies written. All insurers receive payments from the Risk Equalisation Fund in respect of their older customers and the number of overnight stays in hospital incurred by their customers. The Risk Equalisation Scheme offsets some of the additional cost of insuring older and less healthy members. This allows all insured persons to continue to pay the same net amount for a given health insurance product and helps to support affordable premiums for all.