Written Answers. - Private Medical Insurance.

Michael Ferris


90 Mr. Ferris asked the Minister for Health and Children if, in relation to private medical insurance, he will outline his views on community rating and risk equalisation; his rationale for recently abolishing the risk equalisation scheme and providing a £7 million windfall to a company (details supplied); his policy in relation to the future of the risk equalisation scheme; and if he will make a statement on the matter. [1941/99]

Brendan Howlin


91 Mr. Howlin asked the Minister for Health and Children the progress, to date, on the White Paper on Private Medical Insurance; the outstanding issues to be resolved in this regard; and when the White Paper will be published. [1940/99]

Alan Shatter


561 Mr. Shatter asked the Minister for Health and Children if he will give details of the decision made by him concerning the payment of a sum in respect of the risk equalisation fund by BUPA Ireland to the Voluntary Health Insurance; the communication, if any, by him recently to BUPA and the VHI concerning this matter; and if BUPA will be required to make any such payments to the VHI during the course of 1999. [1592/99]

I propose to take Questions Nos. 90, 91 and 561 together.

I fully support the concept of community rating and I am satisfied that, as concluded by the Advisory Group on Risk Equalisation, risk equalisation is necessary to protect the stability of community rating.

The position regarding recent developments in relation to risk equalisation is that my Department wrote to VHI and BUPA in mid-December 1998 advising that, on foot of analysis of the returns received by its actuarial advisers at the end of November, in respect of claims paid in the quarter July-September 1998, that criteria envis aged to determine the commencement of risk equalisation were satisfied during that quarter.
It was pointed out to both insurers that this situation occurred in circumstances where risk equalisation arrangements were currently under review in the context of the White Paper on private health insurance. Accordingly, I was of the view that to proceed with such arrangements at this stage would not be consistent with the effective and proper completion of the review process and that it would be inappropriate to commence risk equalisation based on arrangements that could be subject to change or modification.
Having regard to these circumstances, I decided that the most appropriate course of action would be to advise that the Health Insurance Act, 1994 (Risk Equalisation) Scheme, 1996, would be replaced. It was notified to the insurers concerned, that this course of action was being pursued with the clear intention that, as part of the process, my Department would issue, during the current month, a detailed technical paper on proposed changes. It will be open to the interested parties to discuss this with my Department in connection with its finalisation of the proposals by the end of February. It is envisaged that revised risk equalisation regulations will be in place by the end of May.
My Department issued the detailed technical paper to interested parties on 22 January. The proposals which my Department has formulated are aimed at achieving an effective and sustainable balance between stability and competition in our particular market circumstances. The objective of change being implemented in this area is the maintenance of effective protection of community rating against preferred risk selection and the further encouraging of competition.
I have been asked about when risk equalisation payments are likely to commence. The chosen method for the commencement of risk equalisation is based on the occurrence of certain circumstances in the market which primarily relate to differences in the risk profiles of insurers as indicated by comparative claims experience. The original arrangements envisaged risk equalisation commencing in respect of claims paid in the quarter April to June 1999, with the initial phased payment falling due by 30 September 1999. Under the revised proposal it is not possible to predict at this stage when risk equalisation would commence as this will depend on future market conditions. Under the proposed revised arrangements, the earliest date by which risk equalisation could commence would be in respect of claims incurred in the period October to December 1999 for which payment would be due by 30 March 2000.
The White Paper on private health insurance will include legislative proposals on risk equalisation on the lines indicated in, and pursuant to the discussions held on, the technical paper. As regards progress on the preparation of the White Paper, I am pleased to say that a considerable amount of work has been done. My Department received 70 submissions and has held consultation meetings with 25 organisations and individuals in connection with the preparation of the White Paper. There has also been discussions with other interested Departments in the matter. In the absence of a determination by the Government as to the content and publication of the White Paper, I consider that it would be inappropriate and premature of me to comment on the outstanding issues to be resolved. However, the Deputy is undoubtedly familiar with the many complex issues which relate to the current structure and operation of our private health insurance market. It is my intention that work on the preparation of the White Paper will be completed shortly and that it will be ready for decision by Government by the end of March.