Key proposals in the White Paper on Health Insurance

16 September 1999

Structures: The Voluntary Health Insurance Board; The Health Insurance Authority; Private Healthcare Forum; Lifetime Community Rating
Regulation: Lifetime Community Rating; Minimum Benefit; Ancillary Health Services; Tax Relief on Health Insurance
Hospital Services: Public Hospital Waiting Lists; Public Hospital Bed Stock; Public Hospital Bed Designation; Public Hospital Bed Charges; Hospital Accreditation; Health Technology Assessment; Hospital Management Information

Structures:

The Government propose to give the VHI full commercial freedom of operation.
The Government intend to repeal the VHI Acts 1957 to 1998 and bring forward legislation to convert the VHI to the status of a public limited company owned by the State.
The Government intend to provide an investment of the order of £50 million (63.5 million euros) to restructure VHI's capital base and to enable it to be considered for authorisation as an insurance company.
The Government intend to include in the legislation on a new corporate status for VHI, enabling provision for third party investment in VHI and for its full sale, if deemed desirable.
The Government intend to provide, in the event of the full sale of VHI, for an Employee Share Option Programme.
On the full sale of the State's shareholding in VHI, the Government will allocate a proportion of the value of the original share capital to medical science and research or similar purposes.

The Government have given approval, in principle, to the establishment of the Health Insurance Authority with a remit relating to the maintenance of the common good aspects of the health insurance system.

The Minister for Health and Children will promote and facilitate the establishment of a private healthcare forum, which will bring together the interests concerned with the funding, delivery and use of private acute health services.

The Minister for Health and Children will propose to insurers that a working group, including consumer interests, be formed, under the aegis of the Health Insurance Authority, to devise guidelines for the industry as regards meeting the information needs of the public.

The Government have decided to introduce the principle of "lifetime community rating" to underpin the future viability of community rating. Lifetime community rating will be introduced on the basis of allowing insurers the discretion to apply, or waive, late entry premium loadings as their business needs and plans require. Late entry loadings will not affect persons currently insured, except to the limited extent where they may increase their level of cover at a later date.

The Government have decided to make changes to the risk equalisation scheme to encourage further competition.
The Government are committed to implementing, as quickly as possible, a risk equalisation system based on a casemix approach. They have decided that the Minister for Health and Children should immediately commission a feasibility study on full implementation of such a system by the earliest reasonable date, but in any event not later than June 2002.
Pending the move to a casemix-based system, an interim risk equalisation scheme will apply. This will be based on factors of age, gender and hospital utilisation (as a proxy for the resource intensity of claims). The utilisation measure to be adopted will be 50&percent; based on an insurer's own hospital bed night experience and 50&percent; based on the market bed night experience.
In view of the particular circumstances of the long-established 'restricted membership undertakings' (i.e. schemes limited to particular vocational/employee groups such as Gardai, Prison Officers and ESB staff), the Government have decided to make provision for them to be given a 'once off' choice to be excluded from risk equalisation.
The Government have decided that a new insurer, offering cover to the general public, will be afforded the option of not being liable to fully participate in risk equalisation for a period of 18 months following commencement of trading.

The Government consider that the arrangements relating to minimum benefit, which currently involve extensive statutory schedules listing medical procedures and benefits payable, should be simplified and they have decided that the Minister for Health and Children should arrange for minimum benefit to be expressed in broad terms.
The Government have decided to increase the minimum benefit applicable to the treatment of psychiatric illness. Accordingly, they will require entitlement to specified minimum payments for 20 day-patient days, in addition to the minimum of 100 in-patient days currently prescribed.

The Government will change the regulatory framework to remove 'ancillary health services' from the scope of the Health Insurance Act, 1994. The effect of this will be to free insurers from regulatory requirements in this area and to encourage the development of new products to cover such services.

As a general principle, there are no plans to alter the available standard rate tax relief on health insurance premiums, as one of the main supports to a community-rated private health insurance system.

The Government's aim in relation to the impact of initiatives and strategies in the area of public hospital waiting lists is that no adult should have to wait for more than 12 months and that no child should have to wait for more than 6 months in the specialities targeted for attention.

The Minister for Health and Children will undertake a study and bring forward a Report which will assess the adequacy and appropriateness of the acute bed stock.

The Government are determined that the extent of private health insurance coverage should not impinge upon the position of public patients. The Minister for Health and Children will, therefore, retain the responsibility for designating the number of beds in public hospitals which may be used to treat private patients.

The Government consider that there is a need to address the unsatisfactory situation relating to the pricing of private beds in public hospitals at less than the full economic cost. The Minister for Health and Children will therefore implement a process to move to a system of charging which more fully reflects the economic cost of the services provided. The progression towards more economic pricing will, however, be determined in a way which is sensitive to maintaining stability in the market for private health insurance.

The Minister for Health and Children is pursuing with private hospital interests the potential for a uniform approach to the development of hospital accreditation arrangements.

The Minister for Health and Children will disseminate information arising from national and European-wide initiatives on Health Technology Assessment to public and private hospital interests and to insurers.

The Government are committed to increasing the level of resources available for the further development of management information technology in the public hospitals.
The Minister for Health and Children will explore and facilitate, as far as possible, the desire of private hospitals to participate in the patient activity information systems currently available across the acute public hospital system.