Insurance Equalisation I

Register of Health Insurers

The 1994 Act established a register of health insurance undertakings.  It prohibited carrying on health insurance other than as a registered party. The 1994 Act prohibited non-community-rated health insurance contracts.  It provided that registered undertakers must provide health insurance contracts on the same terms and without discrimination in a range of circumstances.  In particular, the cover could not be varied by reference to

• age,
• sexual preference,
• prospective  suffering from chronic diseases, illness,
• frequency of provision of health services,
• amounts of payment to which the person becomes entitled.

There was an exception for health insurance contracts that provide nursing care for persons over 65 or suffering from prescribed long-term illness or disability.  There are certain reductions for persons under 18 and certain other categories.

Obligation to Insure

A health insurance undertaker (other than a restricted membership insurer) is obliged to effect a health insurance contract with a person under 65 and his / her dependents at that age, save only for circumstances and exceptions that might be prescribed. The Department may prescribe maximum waiting periods for eligibility for health insurance coverage, which may be imposed.  In particular, the conditions may be prescribed in relation to

• persons over 55
• persons suffering from a medical condition
• persons who have not previously had a health insurance contract in the State.

Where there is a health insurance contract with a registered insurer, that insurer or another may not refuse to effect another health insurance contract irrespective of age, save in circumstances that might be prescribed.  A restricted membership undertaking may refuse to effect a health insurance contract with certain persons.

Refusal or Termination

A provider may not terminate or refuse to renew health insurance without consent of the insured except in cases as might be prescribed.  Health insurance contracts must meet a minimum level of coverage as may be prescribed.

Health insurance providers may not provide inducements to terminate or affect the health insurance coverage with it forego payment or offer inducements  to avail of that person’s rights to public health cover,

First Risk Equalisation

The 2001 Act provided for payment of an adjusted health premium by persons over 35 who had not previously effected insurance.  It restated the prohibition on non-community rated health insurance contracts.  It re-enacted the provisions in relation to the obligation to provide health insurance coverage.

A number of reviews between 1994 and 2006 recommended that there was no alternative to risk equalisation if community rating was to be maintained.  Notwithstanding that risk equalisation had been legislated in the 1990s, it did not become operative until 2006.

The Health Insurance Authority recommended to the Minister for Health in October 2005 the commencement of risk equalisation payments. In December 2005, the Minister for Health and Children decided that risk equalisation payments would commence from 1 January 2006.

BUPA Reaction

The initiation of risk equalisation was challenged by BUPA Ireland Limited. The High Court upheld the risk equalisation scheme in 2006 and within three weeks BUPA Ireland announced that it was leaving the market.  Quinn Group purchased its business. In July 2008, the Supreme Court found the risk equalisation scheme to be outside the powers of the legislation.

A stay on payments was imposed by the Courts until it ruled on a constitutional challenge to the Risk Equalisation Scheme. On the 16th of July 2008, the Supreme Court ruled that the Risk Equalisation Scheme was unconstitutional.

The Health Insurance Amendment Act 2007 removed the three-year period from risk equalisation for new health insurance providers. Risk equalisation payments were reduced by 20 percent.

Effect on VHI

The Voluntary Health Insurance Act 2008 conferred additional functions on the Voluntary Health Insurance Board. It was allowed to establish subsidiaries for performance and some of its functions.

Its subsidiary was permitted to hold an authorisation from its financial regulator to provide non and life insurance business.  This might include other levels of areas of insurance such as SwiftCare Clinics.

By 2006, VHI membership stood out at 1.55 million.  However, by 2011, the effect of the recession had caused a significant reduction in memberships. Legislation provided for variations in the normal solvency requirements on a temporary basis.

2009 Scheme

The Government announced, in November 2008, an initiative of an interim age-related tax credits and community rating health insurance levy to support the cost of health insurance for older people. This interim system commenced in 2009 and was designed to be exchequer-neutral.

The objective of the legislation and the Authority in performing their functions as provided in the 2009 Act was to ensure that in the interests of the common good, access to health insurance coverage is available to consumers of health service with no differentiation made between them as regards to cost based on age or general health status.  A health insurer may not engage in a practice, the effect or objective of which is to frustrate the achievement of the principal objective as set out in the legislation.

The Health Insurance Miscellaneous Provisions Act 2009 sought to affirm the purpose of the existing legislation and provide access to health insurance without differentiation of age, and health status.  It requires health insurers to act, offer contracts on these terms.  Persons are to be charged the same net premium as defined.  Insurers are to submit new contracts to the  HIA for approval  20 days before offering them to the public.

Other Regulation

A register of health insurance contracts is maintained.  This is available for inspection. Insurers are obliged to make information returns to the authorities six monthly. The authority must submit a report to the minister based on its undertaking and analysis.

There are new provisions for enhancing advertising and promotion of health insurance.  It is designed to provide greater access and enhance the position of consumers in relation to access to information. The Minister may make regulations regarding the advertising and promotion of health insurance.

Prescribed information may be included in health insurance contracts.  Certain information must accompany advertisements.

The legislation also enhanced the provision for enforcement by way of enforcement notices. Where it is of the opinion that health insurance providers breach their obligations under the legislation, the Authority may take a number of steps and ultimately apply to the High Court requiring compliance.

Tax Credits

The Health Insurance (Miscellaneous Provisions) Act 2009 provided for tax credits to enable older persons to have access to health insurance coverage and to provide mechanisms whereby overcompensation from such tax credits might be repaid.

The legislation provided for age-related tax credits in relation to private health insurance.  They are available to persons over 50.  It is an addition to the income tax relief (available to the insurers directly) generally in respect of medical insurance premiums.