Measures decided by Government will stabilise health insurance for the long term, not cause price increases – Mary Harney, T.D., Minister for Health and Children
The Minister for Health and Children, Mary Harney, T.D., said today (Thursday, 26th April),
“The decisions taken by the Government this week are a clear and balanced response to the need for reform in the health insurance market.
I would like to highlight what is definitely happening now, what is out for consultation and what is open for future decision. And I would like to comment on some extraordinary red herrings introduced into this debate.”
The Minister brought the measures to Government yesterday, arising from the reports of the Competition Authority, the Health Insurance Authority and the Barrington Group.
What is happening now
‘The amendments being brought through the Houses of the Oireachtas today to the risk equalisation scheme regulations have a specific purpose, to provide clear grounds for the making of returns to the Health Insurance Authority arising out of amended legislation in February.
‘Secondly, they also provide for a discount of 20 per cent in the amount of risk equalisation payments due to be made. This is a proportionate response to the removal of the three-year exemption, to encourage competition. The reduction will be in the order of €10 million, less than 1 per cent of VHI’s premium income and about €6 per VHI member.
‘It cannot be argued that this limited change will drive up prices.
‘The other immediate steps decided by Government are to introduce pro-consumer measures to make it easier to select health insurance at the time of renewal and to switch, just as we did in the motor insurance market.’
What is out for consultation
“A number of matters will be the subject of a consultation process, including:
1. Whether a measure present in law since 2001 should be commenced, i.e. the concept of ‘lifetime community rating’ that gives an incentive to people to take out health insurance earlier in life. The principle behind this is to support older people, by having a large number of younger people covered by health insurance.
Our community rated market relies on there being a lot of younger people taking out health insurance. The question at issue is whether there should be an incentive of some nature to people to take out health insurance early in life. The extent of any incentive would be a matter for political decision, not for decision by insurance companies.
‘To be clear: any move in this regard could not possibly affect anyone who presently has health insurance. We will seek views on this matter before any steps are taken.
2. Whether all health insurance policies should be community-rated. The question posed here is whether people with low or modest health insurance cover should subsidise the additional benefits purchased by wealthier people who have very high levels of coverage. Should all policies, even if they offer the most generous benefits in the most expensive hospitals here and internationally, be subsidised by the vast bulk of people who have normal benefits in their health insurance policy? We will seek views on this matter too. Again, no change will be or can be introduced except by political decision. Insurance companies cannot make this change themselves.”
What is to be decided in the future
“The Government has laid the groundwork for decisions by government next December on how the VHI can be capitalised to meet solvency requirements by the end of 2008.
‘This was first set out in the White Paper on Health Insurance in 1999
‘No decisions have been taken this week. We have an open mind on all options, including the continuation of the VHI in State ownership.
‘The advantage of looking at all options is that we don’t confine ourselves to asking the customers of VHI to come up with the money to build the VHI reserves through price increases. That would be the sure way to increase price. It is incorrect to argue that asking the VHI to meet solvency requirements by the end of 2008 means large price increases.”
Several extraordinary red herrings have been thrown into this debate and they deserve to be seen for what they are.
The Government’s decisions this week involves no privatisation of health care providers, hospitals or insurance.
“We already have universal coverage for hospital benefits in Ireland: these changes and what remains to be decided make no case for universal health insurance, which is compulsory health insurance and a new tax on ordinary people.
‘Competition is good for consumers and is compatible with community rating. A return to a monopoly in health insurance would not be beneficial for consumers.
Our commitment to competition in no way diminishes our policy to ensure that normal, reasonable health insurance is affordable for older and sicker people.”