Q What does the Supreme Court's rejection of risk equalisation mean for the health insurance market?
A Private health insurance in Ireland operates under the principle of community rating, which means that insurers must charge consumers the same premium for a particular insurance product, regardless of their age, gender and current or likely future state of their health.
A 50-year-old with a heart condition can buy the same hospital plan for the same price as a healthy 21-year-old, despite the fact that the insurer is more likely to have to pay out on a claim by the former.
Yesterday's ruling has not removed the system of community rating, which is enshrined by the Health Insurance Acts. But both the VHI and the Health Insurance Authority believe risk equalisation - the system where insurers with mostly younger members are obliged to compensate insurers with mostly older members - is vital to keep the market community rated.
Q Will new insurance companies enter the market?
A The VHI's rival insurers believe risk equalisation is simply a subsidy to the VHI and has very little to do with upholding the principle of community rating. Its removal will encourage competition and innovation in the market, according to Quinn Healthcare. The absence of risk equalisation does make the market more attractive for new or foreign-owned insurers. But as very few consumers switch insurers - only about 1 per cent do every year - it is very difficult for new players to attract more than tiny trickle of customers.
Q Are older people the "biggest losers" of the court ruling?
A According to Age Action, they will be, although it cautions that the full implications are still unclear. The VHI threatens that the decision may have "serious consequences for older and chronically ill members of society".
By this, it means that its members, who tend to be older and thus have more medical problems, will have to pay more. It probably does not mean that people who have certain health conditions will suddenly be asked to pay extra "loadings" on their premiums.
Q How can older people avoid paying higher premiums for health insurance?
A Anyone can switch to a new health insurer at any time, regardless of age. The only difference is that if you are upgrading to a higher level of cover, people aged 65 and over will have to sit out a longer waiting period than younger people - a maximum of five years, compared to a maximum of two years for people under 65. Waiting periods are also longer for older people taking out cover for the first time.
There is nothing to stop VHI members switching to Quinn or Hibernian - without loss of cover - if the VHI's premiums become unaffordable. The VHI's rivals already offer comparable or near identical cover for hospital treatment and other medical costs at cheaper rates than the VHI.
Q Would risk equalisation have stopped premiums from going up?
A No. All insurers increase their premiums every year in line with the cost of providing healthcare. The cost of hospital services has risen 10 per cent in the past year, according to the Central Statistics Office. With new, more expensive treatments available and people living with illnesses for longer, the cost of healthcare and insurance is unlikely to stop soaring.
