Written Answers. - Private Health Insurance.

Jimmy Deenihan

Question:

341 Mr. Deenihan asked the Minister for Health and Children if his Department has carried out a regulatory impact analysis regarding the possible impact of a risk equalisation scheme in the private health insurance market, as recommended in the report, Towards Better Regulation, recently presented by the Department of the Taoiseach and also by the EU Commission Services; and if he will make a statement on the matter. [11080/03]

Jimmy Deenihan

Question:

342 Mr. Deenihan asked the Minister for Health and Children if his Department has carried out, or commissioned, an economic and statistical-actuarial analysis regarding the prospective impact of an RES on the PHI market, with particular regard to the effect of an RES as a barrier to entry which also impedes competition and the effective operation of the single market; and if he will make a statement on the matter. [11081/03]

Jimmy Deenihan

Question:

343 Mr. Deenihan asked the Minister for Health and Children if he continues to adhere to the view that PHI is an alternative to the public system and admissible in principle under the general good clause, as the core justification for enacting an RES; and if this view has the endorsement of the Commission services; and if he will make a statement on the matter. [11082/03]

Provision for risk equalisation is necessary to maintain the established common good principles of community rating, open enrolment and lifetime cover. It has been the policy of successive Governments.

EU Council Directive 92/49/EEC, the Third Non-Life Insurance Directive, allows for specific legal provisions to be adopted in the interests of the common good in the field of voluntary private health insurance, including measures relating to loss compensation between insurers. The EU Internal Market Directorate General determined that Ireland was entitled, in principle, to have specific legal provisions protecting the common good, including risk equalisation, in the area of voluntary health insurance, subject to the principles of necessity and proportionality. Detailed submissions have been made to the EU Competition Directorate General on the basis that risk equalisation does not constitute State aid and is a necessary support to the operation of community rating going forward. My Department's position, as set out in submissions to and discussions with EU Commission Services, is that risk equalisation is necessary to maintain community rating.
Both the principle and detail of providing for risk equalisation in the VHI market have been the subject of widespread consultation, analysis and extensive examination over a number of years. In addition to consultations carried out by my Department in the matter, the process has involved assessment of the issue by authoritative independent bodies nationally and by EU Commission services. The consideration process has involved the following: professional actuarial advice to my Department and consideration of authoritative opinion, and experience, in other jurisdictions; consultations on a draft scheme circulated to insurers and EU Commission in 1995; submissions to, and discussions with, the EU Commission's Internal Market Directorate, 1993 to 2002, on Ireland's entitlements under the provisions of Council Directive 92/49/EEC; submissions to, and discussion with, the EU's Competition Directorate – a process which is currently ongoing – concerning the implementation of a scheme of risk equalisation by reference to the requirements of EU State aid rules; consultations on a technical paper on risk equalisation, issued to interested parties early in 1999, in preparation for the White Paper on private health insurance; consultations carried out in connection with the publication of the White Paper on Private Health Insurance published in 1999.
In addition to the above: consultations, analysis and considerations have been carried out by the independent advisory group on risk equalisation scheme, 1998 report, established on foot of agreement with the main health insurers; the matter of risk equalisation has been the subject of reports prepared by the Society of Actuaries, which is the professional body governing the actuarial profession in Ireland; and the independent statutory Health Insurance Authority has engaged in public consultations in order to inform the exercise by it of its key functions in relation to any commencement and implementation of risk equalisation transfers between insurers in the future.
Under the legislation actual risk equalisation is not automatically commenced on the making of a scheme. It requires insurers to submit data to the HIA to inform consideration by it of whether the authority ought to recommend the commencement of actual risk equalisation payments in the best overall interests of health insurance consumers. It is open to the authority to consider the specific matters to be included by it in determining its recommendation. Under the provisions of the Health Insurance (Amendment) Act 2001 it must have regard to the need to maintain the application of community rating across the market for health insurance and to facilitate competition between insurance undertakings. The authority has already engaged in public consultation relevant to the exercise of its statutory role. I am aware that it recently undertook other initiatives to inform the discharge of its responsibilities in the regulation of private health insurance, including consideration of the facilitation of competition.
Considerable assessment and analysis has been undertaken, and arrangements put in place, to ensure that all relevant considerations relating to a risk equalisation measure that is necessary, proportionate and balanced are taken into account.