Health insurance risk equalisation ‘needed for community ratings’
As the controversy continues with the VHI rejecting new proposals from the Quinn Group offering to accept a proportion of the company’s older customers, the society insisted risk equalisation would be needed in any event.
Risk equalisation involves the payment of subsidies by newer entrants to the health insurance market to the VHI, which has an older customer base and is more likely to receive more insurance claims.
Community rating is where everyone pays the same premium for insurance, regardless of age.
Taoiseach Bertie Ahern yesterday insisted the situation regarding risk equalisation and Quinn Direct was still unclear.
Mr Ahern told TDs the Government needed to see what kind of contract Quinn Direct was putting forward to buy BUPA Ireland before it could deal with the health insurance consequences on which it has sought legal advice.
Health Minister Mary Harney is currently taking legal advice from attorney general Rory Brady and senior lawyers on a potential loophole that would allow health insurers to avoid paying risk equalisation.
The society said that even with a much greater number of insurers operating in the market or the division of VHI’s current business between a number of insurers, risk equalisation would still be needed as it was unlikely that all insurers would have similar risk profiles.
“Risk equalisation goes hand in hand with community rating in an open insurance market,” said David Harney, chairman of the society’s health care and social policy committee.
The society that represents business professionals who deal with the financial impact of risk and uncertainty believes, however, that there were different ways in which a risk equalisation could be structured.
The present system operates retrospectively but the society believes a prospective scheme that would determine the amount to be paid in advance would provide greater transparency and greater predictability for insurers.
Under a prospective scheme the Health Insurance Authority (HIA) would publish a set rates for different age groups and gender that would enable health insurers to know in advance what they would have to pay into the fund, or how much they would expect to receive based on their membership.
Last week, Colm Barrington, managing director of Babcock and Brown investment bank in Ireland, was appointed by the Government to head the new review group to see whether competition can be maintained under current regulations.
That group is due to report back to Ms Harney by the end of March.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
