A fundamental revision of the principle of intergenerational support lies at the heart of the reform of the private health insurance market proposed by the Government yesterday.
This concept - that the sick and the old should not pay significantly more for health insurance than the young and healthy - underpins the health service as it stands. And, it can be argued, is part of an unwritten contract with the electorate, the flip side of which is the creation by successive governments of a health system very heavily dependent on the private and voluntary sectors. It is a bargain to which over 50 per cent of the population is a party.
Tampering with risk equalisation is thus a breach of trust with the electorate and not something any government would or should undertake lightly. The publication of the proposals - in the prelude to the election - is timely and means that either by accident or design the people will have a chance to pass judgment.
The Government position is well grounded in several reports into the health insurance industry, carried out over the past twelve months, which have been synthesised into the report of the Private Health Insurance Advisory Group published yesterday. The group is firm in its conclusion that the system as currently structured does not work because it discourages competition. This in turn works against the interests of consumers, they argue, by protecting the dominant position of the VHI, the efficiency of which is strongly questioned.
They have made a number of recommendations for reform, ranging from common sense to radical. Many fall into the first category and are likely to be implemented by whoever holds power after the general election.
The substantial restructuring of the VHI recommended by the group is also likely to happen as the European Commission has made it clear that they want to see action in this area. The proposals, if implemented, will put the VHI on much the same footing - from a regulatory and financial perspective - as the two privately owned players. It will however be expensive, with figures as high as €200 million being postulated as the size of the investment required in the VHI. Whether this comes about through privatisation or the injection of State money, may well depend on the outcome of the election.
But the real difficulty for whoever inherits the health brief is that, if the advisory body's analysis is correct, these measures will not deliver more competition unless accompanied by a significant watering down of the level of intergenerational solidarity. The main changes proposed are surcharges for those taking out insurance later in life and the limiting of intergenerational support to a basic level of cover.
Health is set to be a significant issue in the coming election and the next few weeks should determine how likely the next government will be to take the risk that the advisory group has got it right.