FF deputy proposes review of risk equalisation scheme

The Fianna Fáil chairman of the Oireachtas Committee on Health and Children, John Maloney TD, has proposed that the Government should review a key element of health insurance legislation governing the controversial risk equalisation scheme for the sector.

Mr Maloney said he believed the provisions of the scheme, which would require the country's second-largest insurer, Bupa Ireland, to pay over tens of millions of euro to its rival, VHI, were "unfair".

He was giving serious thought to putting a motion before the Fianna Fáil parliamentary party calling on the Government to review the risk equalisation provisions in the legislation.

Risk equalisation is a form of compensation scheme in the health insurance industry under which companies with relatively younger subscribers (who claim less frequently) would pay over money to rivals with relatively older memberships.

The Government believes that risk equalisation is essential to underpin the concept of community rating, where everyone pays the same for similar cover, regardless of age.

Bupa has claimed that under risk equalisation it would be forced to pay out €161 million to the VHI over the next three years at a time when its projected profits were €64 million.

Bupa yesterday launched a High Court challenge to risk equalisation. It claimed that the measure was both unconstitutional and in breach of EU law.

Mr Maloney told The Irish Times yesterday that he was "personally of the view that any measure that requires an insurer to pay over more than its profits is a threat to competition and must be disproportionate".

He said that, having heard the submissions of the various parties to the Oireachtas Committee on Health and Children on the risk equalisation issue, he believed the whole area was "unsettled".

He and the committee were concerned only that the best deal was available to consumers.

The risk equalisation debate had generated real concerns among health insurance subscribers.

Those with or considering joining Bupa were worried that it would pull out of Ireland if risk equalisation came into force.

VHI subscribers were concerned at the financial implications for the company in the absence of risk equalisation payments.