Competition in the Irish Private Health Insurance Market

also as we know issued a technical paper in 1999, by the government
after issuing the white paper, and by the HIA after it was established,
was it can only be said breathtaking in its scope. Every individual,
entity and body, no matter how remotely connected with PMI, was
either given an opportunity to or else was specifically asked to
comment on, the various discussion papers then in existence.”
The Recommendations of the Authority on the Commencement of RE
Payments
4.82 Most articles of the Risk Equalisation Scheme came into force on 1 July
2003. Under the Scheme (as amended), health insurance undertakings
were required to make specified returns to the Authority in accordance
with section 12 of the Act for six month periods commencing on 1 July
2003, i.e. the first returns were due for the period from 1 July 2003 to
31 December 2003.
4.83 Under section 12 of the Act and the provisions of the Scheme, the
Authority was required to evaluate and analyse the returns made to it
for the purpose of ascertaining the differences, if any, in the nature
and distribution of insured risks among scheme undertakings. From
that evaluation and analysis, the Authority was required to determine,
in accordance with a formula set out in the Second Schedule to the
Scheme, the market equalisation percentage (“MEP”). The MEP is
approximately equal to the amount that would be transferred if risk
equalisation payments were commenced, expressed as a percentage of
the total benefits in the market that are subject to risk equalisation.
The MEP measures the significance of any risk profile differences
between insurers. The Authority then prepared and furnished a written
report to the Minister giving details of the evaluation and analysis
carried out. The report was required to specify the market equalisation
percentage determined and the health status weight adopted for the
purpose of such determination and contains such other information and
advice concerning the carrying on of health insurance business, and
developments in relation to health insurance generally, as the
Authority considered ought to be included as a result of its evaluation
and analysis.
4.84 The market equalisation percentage, in the first four sets of returns,
was 3.7%, 3.5%, 4.7% and 4.2%.The Authority, having evaluated
and analysed the returns, recommended against the introduction of
risk equalisation payments in the first two six month periods but
recommended its introduction in the third period (July to December
2004) and fourth periods (Jan to June 2005). The Minister agreed to
commence payment with effect from 1st January 2006.
4.85 The reasons for the recommendation of the Authority in the fourth
period as taken from its report were as follows:
• “The Authority is in agreement with many other independent
experts, that risk equalisation payments are normally appropriate
in a community rated market with open enrolment and lifetime
cover. These independent experts include the following:
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