Risk Equalisation

July 18, 2008

Does that affect me? The answer could be ‘”Yes”. ‘If you are old/suffering from a long-term medical condition then this week’s ruling in the Supreme Court could well end up costing you a great deal more for health insurance cover.

Risk equalisation is a scheme to ensure that community rating is implemented whereby everyone, young and old, sick or healthy, pays the same premium. It is a scheme that provides for insurance companies with fewer elderly subscribers to compensate other companies who have higher numbers of medically vulnerable subscribers. This week, the Supreme Court struck down legislation which our government had in place to ensure that risk equalisation was enforced. Up until now, this legislation placed restrictions on other insurers thereby restricting competition within the private health insurance market. The VHI is the longest serving health insurance provider and carries the largest number of elderly customers. It currently holds a monopoly with 70 percent of the health insurance market and as the state insurer, was protected up until now by risk equalisation. This week’s decision is without doubt, an embarrassment for the government and it may have serious consequences for the VHI and it’s subscribers. A more detailed explanation of the situation can be found here in this week’s online edition of The Irish Medical Times.

Competition is good but a balance has to be found whereby those most vulnerable in our society are not squeezed out of the private health insurance market. This latest development potentially represents a big upset to our Minister for Health’s plans to privatise the health service. Her future in the Department of Health, is looking more than a little bleak.