Dáil Éireann Debate, Thursday - 13 February 2014
260. Deputy Bernard J. Durkan asked the Minister for Health the extent to which private health insurance increases continue to be monitored by his Department with a view to ensuring that all insurers carry a fair and equitable share of the demographic profile; and if he will make a statement on the matter. [7372/14]
View answerThe main legislative provisions for the regulation of the Irish private health insurance market are included in the Health Insurance Acts 1994 to 2013 and Regulations made under those Acts. Under this legislation, my Department oversees the maintenance of a competitive and sustainable private health insurance market and monitors developments on an ongoing basis.
There is a significant disparity in the membership age profile among the four commercial insurers operating in the market. VHI Healthcare continues to have a much greater proportion of members in the age groups 60-69 and above when compared to other insurers. Insurers with more older customers have higher claims costs. For example, in 2012:
- VHI had market share of 56% but had claims of 67% of the total claims paid in the market.
- Laya had 22% market share but had 14% of total claims paid in the market.
- Aviva had 17% market share and 13% of total claims paid.
Given the disparities in claims costs, mostly related to age and health status, between competitors operating in the health insurance market, there is a need to support community rating with a robust risk equalisation scheme, to create a level playing field in the market. The aim of risk equalisation is to look at the market as a whole, and to distribute fairly the differences that arise in insurers’ costs due to the differing health status of all of their customers. It does so by providing risk equalisation credits (based on age, gender and level of cover) in respect of insured people aged 50 years and over. Without such support, health insurers have a strong financial incentive to ‘segment’ the market by offering policies targeted at younger, healthier people.
The Health Insurance (Amendment) Act, 2013 sets out revised risk equalisation credits and the corresponding stamp duties that will apply under the Risk Equalisation Scheme from 1 March 2014. These revised RE credits will further level the playing field within the market, by making older members less costly to insure. The Scheme supports competition by encouraging insurers to move their focus away from avoiding older, less healthy customers and is intended to support the Government’s efforts to maintain community rating in the Irish health insurance market.
