Minister for Health, Stephen Donnelly TD, has received Government approval to publish the Health Insurance (Amendment) Bill 2022, which provides the legislative basis for the rates of risk equalisation credits and stamp duty levies to apply in the private health insurance market in 2023.
The Health Insurance (Amendment) Bill 2022 provides that stamp duties on non-advanced health insurance contracts will decrease from 2022 to €109 (decrease of €12); and stamp duties on advanced health insurance contracts will increase from 2022 to €438 (increase of €32).
The stamp duties collected on health insurance contracts do not go to the Exchequer. They are collected into the Risk Equalisation Fund and redistributed in the form of credits to health insurers, to compensate for the additional cost of insuring older and less healthy people.
The Bill will also make further provision for the appointment and powers of authorised officers of the Health Insurance Authority. These provisions will strengthen the role of the Authority in carrying out their functions as regulator of the private health insurance market.
The Bill is expected to be enacted by the Oireachtas before the end of this year.
Minister Donnelly stated:
“I am pleased to announce the positive decision of Cabinet earlier this week to publish the Health Insurance (Amendment) Bill 2022. This annual legislation is necessary to support the community-rated health insurance market in Ireland. The risk equalisation credits, and stamp duty levies are critical to the sustainability of our health insurance market, which is designed to be equitable and fair, by spreading the cost of health insurance across the entire insured population, ensuring everyone pays the same price for the same health insurance product. I welcome the provisions in the Bill relating the enforcement powers of the Health Insurance Authority, the statutory regulator of the private health insurance market. The health insurance market is highly complex, and these powers will serve to strengthen the important role of the Authority in carrying out their functions of monitoring the operation of the Health Insurance Act and the business of health insurance.”
ENDS //
NOTES TO EDITOR
Ireland has a community-rated voluntary private health insurance market, meaning everyone pays the same price for the same health insurance policy. The Risk Equalisation Scheme is the mechanism designed to support the objective of a community-rated health insurance market.
The Risk Equalisation Scheme (RES) has operated in the health insurance market since 1 January 2013 and is provided for under the Health Insurance Acts 1994 to 2021. Under the RES, insurers receive risk equalisation credits from the Risk Equalisation Fund 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 policy written. The stamp duty levies are collected by the Revenue Commissioners and transferred to a Risk Equalisation Fund which is administered by the Health Insurance Authority (HIA). The RES is designed to be exchequer neutral in that the credits are funded entirely by the stamp duties raised annually.
Amendments to the health insurance legislation are required each year to update the level of risk equalisation credits, and stamp duty levies necessary to fund the credits.
On 30 September 2022, the HIA submitted an evaluation and analysis of market data and provided advice to the Minister on risk equalisation credits and stamp duties to apply from 1 April 2023. This Bill implements the HIA’s recommendations.
Risk equalisation credits are paid to insurers in the form of age-related health credits for all insured persons over 65 years of age across age groups.
A hospital utilisation credit is also paid in respect of all insured members for each overnight stay and for day case admissions in hospital. The current level of Hospital Utilisation Credit remains unchanged from 2022 rates at €125 per night and €75 for day case admissions.
A high cost claims credit is payable across all insured persons age groups and targets subsidies towards the claims costs of sicker customers. The high cost claims credits support the principal objective of the Health Insurance Act to ensure there is no differentiation made in health insurance coverage across young and old and healthy and sick. High cost claims credits work by targeting claims costs over a threshold of €50,000 in a rolling 12 month period and compensating the insurer for 40% of the claims cost over this threshold.
Main provisions of the Bill
This Bill provides for the setting of the revised risk equalisation credits and stamp duty levies which will apply to the market from 1 April 2023, taking consideration of the Health Insurance Authority's recommendations. The Minister for Health has approved the risk equalisation credits to apply in 2023 and the Minister for Finance has approved the corresponding stamp duty levies required to fund the credits.
In addition to the standard annual technical adjustments, the Bill provides for specification of the end date of the act of entrustment. This is the legislative mechanism under which the Risk Equalisation Scheme operates. The Risk Equalisation Scheme is deemed to be State Aid and, as such, it must be approved by the European Commission. It was approved in March 2022 to operate until March 2027. The European Commission has requested this amendment as part of its approval of Ireland’s Risk Equalisation Scheme which was granted earlier this year, and a commitment was made to do this in Irish law at the earliest opportunity. The Minister for Health will engage with the European Commission in advance of the initial end date to receive approval for a new duration to be put in place for the act of entrustment.
The Bill will also make further provision for the appointment of authorised officers of the Health Insurance Authority. The Bill also seeks to extend the enforcement powers already provided for in legislation to non-registered businesses purporting to be carrying on health insurance business in Ireland. These appointment and enforcement powers are intended to further strengthen the role of the Health Insurance Authority in carrying out its functions as regulator of the private health insurance market in Ireland.