Varadkar publishes Health Insurance (Amendment) Bill 2015
Minister for Health Leo Varadkar has published the annual Health Insurance (Amendment) Bill which makes a number of changes to credits and levies on health insurance products, with the aim of sustaining community rating in our health insurance market so that older citizens and people with illnesses can afford health insurance and are not discriminated against in favour of younger healthier people.
The revised rates were recommended by the Health Insurance Authority and will take effect from next March 1st. The Bill is expected to be enacted by the Oireachtas before the end of the year.
Minister Varadkar said: “The number of people with health insurance has grown by more the 100,000 over the last 12 months due to reforms introduced by the Government including young adult discounts, lifetime community rating and reduced stamp duty and levies. We have ended the cycle of double-digit increases in premiums. We need continue to ensure that health insurance remains affordable for as many people as possible. I am pleased to confirm that the levy on lower-level products will now be reduced by €38 per adult and €13 per child. There will be a slight increase of €4 for advanced products for adults but this will fall for children.
“The Bill increases the age credits for those aged 70-plus and sets age credits at zero for the 60-64 age group. This strikes a fair balance between the need to sustain community rating by keeping health insurance affordable for older, less healthy consumers, and ensuring that the market remains sustainable by keeping younger healthier consumers in health insurance. One of the main reasons we took the decision to set credits at zero for those aged under 65, is because maintaining credits for this age group would have increased the stamp duty by approximately €34 for every single person holding health insurance.”
Commenting on the extension of utilisation credits to day cases, the Minister said: “Thirty per cent of hospital in-patient activity for insured members is now carried out on a day case basis, so extending RE credits to this setting is an appropriate scheme enhancement reflecting the individual’s health status. This will target support to insurers who have less healthy members of all ages. It will also incentivise hospitals and insurers to do more day case work instead of admitting patients the night before and using a hospital bed unnecessarily.”
The Risk Equalisation Scheme has operated in the health insurance market since 1 January 2013 to compensate for the additional cost of insuring older and less healthy members. Under the Scheme, insurers receive risk equalisation credits from the Risk Equalisation Fund. The credits are funded by stamp duty levies payable by open market insurers for each policy written.
The Health Insurance (Amendment) Bill 2015 will revise the applicable credits and corresponding levies for policies written from 1 March 2016 onwards as follows:
· an increase in RE credits for those aged 65+ while setting the RE credit at zero for those aged 60 to 64;
· the continuation of the utilisation credit of €90 for overnight stays in hospital;
· the introduction of a utilisation credit of €30 for day case admissions.
The corresponding applicable community rating stamp duty levy will be:
· reduced on products ‘not providing advanced cover’ for an adult from €240 to €202 (-€38) and from €80 to €67 (-€13) for a child;
· increased slightly for products providing ‘advanced’ cover; to €403 per adult, (+ €4) while reduced to €134 in the case of a child (- €1).
Note for Editors
Risk equalisation is designed to support a community rated health insurance market, whereby all customers pay the same net premium (adjusted to reflect any loadings applicable under lifetime community rating) for the same health insurance product, irrespective of age, gender or health status.
The Health Insurance Acts 1994 to 2014 have provided for a Risk Equalisation Scheme for the health insurance market since 1 January 2013. Under the Scheme, insurers receive risk equalisation credits to compensate for the additional cost of insuring older and less healthy members. The credits are funded by stamp duty levies payable by open market insurers for each insured life covered. The stamp duty levies are collected by the Revenue Commissioners and transferred to a risk equalisation fund administered by the Health Insurance Authority (HIA). Legislation is required each year to revise the applicable risk equalisation credits and the corresponding stamp duty levies necessary to fund them.
This Bill provides for:
(1) an increase in the RE credits payable for those aged over 65 years, based on age, gender and level of cover (credits for insured people age 60 – 64 are set at zero),
(2) the strengthening of the proxy health status measure by expanding the circumstances where a utilisation credit is payable to include €90 for each overnight stay in hospital and €30 for day case admissions,
(3) a reduction in the stamp duty on products ‘not providing advanced cover’ for an adult from €240 to €202 (-€38) and from €80 to €67 (-€13) for a child, and
(4) a small increase in stamp duty rates for products providing ‘advanced’ cover; to €403 per adult, (+ €4) and a small reduction to €134 per child (- €1).