My Department oversees the maintenance of a competitive and sustainable private health insurance market, under the provisions of the Health Insurance Acts 1994 to 2012, and monitors developments on an ongoing basis, to ensure that the market is regulated appropriately in the transition to a market-based Universal Health Insurance system.
I have consistently raised the issue of managing costs with health insurers and am determined to address rising costs in the sector in the interests of consumers. I want insurers to address the base cost of each element of claims which they pay. This is the real issue as costs are becoming unsustainable at present. Last year, I established the Consultative Forum on Health Insurance to generate ideas to address health insurance costs, while always respecting the requirements of competition law. I have made it clear to the health insurers that I believe significant savings can be made, ultimately reducing the impact of rising health costs on health insurance premiums for the consumer. Last week I announced the appointment of an independent Chairperson to work with my Department and the insurers under the auspices of the Consultative Forum on Health Insurance. The Chairperson will oversee a process of review to give effect to real cost reductions in the private health insurance market. Specific areas that I have asked insurers to address include:
- Audit - of the volume of procedures;
- Clinical audit - to determine the appropriateness of procedures being claimed for;
- Procedure based payments - in particular with a view to their extension to the public health sector; and
- Benchmarking - to determine the underlying basis for the cost of specific procedures, with a view to driving costs downwards.
I am strongly of the view that all procedures should be provided at an appropriate setting that is safe and provides value for money for consumers.
Given VHI’s very significant share of overall costs in the market, I will continue to focus strongly on the need for the VHI to address its costs. At my instruction, the VHI recently compiled a detailed cost containment plan, which sets out savings targets for 2013 and for the 2014-2016 period, so as to minimise the need for any future premium increases. The savings targets over this period are to be achieved through a combination of initiatives including rate reductions with private hospitals and consultants, utilisation management, expansion of clinical audit, reductions in high cost drugs and prosthesis, provider reviews and the continued transition of procedures to lower cost, medically appropriate settings.
The Deputy has also raised concerns about the need to ensure that cherry-picking by health insurers is discouraged. In this regard, the Health Insurance (Amendment) Act, 2012 provides for the introduction of a permanent Risk Equalisation Scheme (RES) in the private health insurance market, with effect from 1 January, 2013. This new scheme puts in place, for the first time in this country, a permanent and robust system of Risk Equalisation. The scheme is budget neutral and has no overall impact on the costs in the market. It supports competition by encouraging insurers to move their focus away from avoiding older, less healthy customers and towards innovation, achieving greater efficiencies and improved customer service. This is the kind of competition which is best for consumers and is intended to support the Government’s efforts to maintain community rating in the Irish health insurance market.
The revised rates for 2013 will, from 31 March onwards, increase the support levels in respect of older and less healthy customers, so that health insurance will be made more affordable for them. Without this support, health insurers have a strong financial incentive to ‘segment’ the market by offering policies targeted at younger, healthier people. I will continue to focus strongly on this issue, as part of measures to ensure the sustainability of the private health insurance market in the transition to a Universal Health Insurance system.