Annual Report and Accounts 2008

Transcription

1 Aual Report ad Accouts 2008

2 Cotets 1. Chairma s Statemet 2 2. Membership ad Staff of the Authority 4 3. Fuctios of the Authority Regulatio Regulatory Structure of the Market Risk Equalisatio The Health Isurace (Miscellaeous Provisios) Bill, The Register of Health Beefit Udertakigs Research ad Advice Commissioed Research Legislatio Moitorig the Health Isurace Eviromet Cosumer Iterests Cosumer Queries ad Complaits Cosumer Iformatio Website Corporate Affairs 22 The Health Isurace Authority Aual Report ad Accouts Strategy Corporate Goverace Relatioship with Stakeholders Resources Reports ad Accouts Appedices 41 Appedix A 41 Appedix B 42

3 1. Chairma s Statemet I accordace with Sectio 33(2) of the Health Isurace Act, 1994, I am pleased to preset the Aual Report ad Accouts of the Health Isurace Authority ( the Authority ) for the year edig 31 December A major focus of the Authority s work i 2008, as i previous years, was providig advice i relatio to how the Irish commuity rated health isurace market should be structured i order to maximise the beefits of commuity ratig for all cosumers. The Health Isurace Authority Aual Report ad Accouts 2008 I ay commuity rated market, a comprehesive risk equalisatio or loss compesatio system is required i order for the market to operate i the best iterests of all cosumers. Without a risk equalisatio or loss compesatio system, isurig older or ill people will be loss makig. As a result, isurers that cover a higher proportio of older people will be at a sigificat competitive disadvatage ad isurers will seek to avoid isurig older people. It follows that, without risk equalisatio or loss compesatio, competitio will ot fuctio properly ad the market will operate couter to the iterests of ill ad older people. This is why it is the iteratioal orm for risk equalisatio or loss compesatio to apply i commuity rated markets. I July of 2008, the Supreme Court foud that the Irish Risk Equalisatio Scheme was ultra vires the Health Isurace Acts ad the Scheme was set aside. This had sigificat cosequeces for the work of the Authority i Prior to the decisio of the Supreme Court the Authority was operatig the Risk Equalisatio Scheme ad had furished a umber of reports to the Miister, which showed the extet of the differeces i risk profile betwee the various isurers operatig i the market. Followig the Supreme Court Decisio, the Authority focused o providig advice to the Miister i relatio to how to support the operatio of commuity ratig i the iterests of cosumers i the chaged circumstaces. The Authority advised that the alteratives were either to recostitute the Risk Equalisatio Scheme i some form or itroduce some form of levy based or tax based loss compesatio system. The Authority also recommeded a rage of other measures to support commuity ratig. The Health Isurace (Miscellaeous Provisios) Bill was itroduced to the Oireachtas i December The Bill icludes a iterim levy / tax based system to support commuity ratig. The Authority has commeced work i relatio to draftig a comprehesive risk equalisatio / loss compesatio system to replace these iterim measures whe they expire i The Bill also icludes other measures recommeded by the Authority, such as assigig a eforcemet fuctio ad a icreased cosumer iformatio fuctio to the Authority. 2

4 The Authority also provided advice to the Miister i relatio to other health isurace matters, icludig the draftig of Lifetime Commuity Ratig ad Ope Erolmet Regulatios. I May 2008 the Authority published a report o cosumer attitudes ad behaviour. The report showed that cosumers valued their health isurace cover highly ad were reluctat to allow it to lapse. The Report also idicated that there was a high ad growig level of satisfactio amog cosumers with regard to health isurace. The health isurace market cotiued to grow throughout 2008 ad at the ed of the year 2.3 millio people or 52% of the populatio had health isurace. The cotiued growth of the market i recet years has bee iflueced by ecoomic coditios. The questio arises as to the extet to which the size of the market will be affected by the curret ecoomic dowtur. There are already idicatios that the total size of the market is decliig ad this will preset challeges for the participats i the market ad for the maiteace of commuity ratig. The Authority cotiues to provide cosumers with iformatio o their rights, icludig their right to chage health isurer. I 2008, the Authority reached a agreemet with health isurers to issue a Health Isurace Authority cosumer iformatio documet to cosumers with their reewal otices. The Authority also issues cosumer iformatio by publishig ad circulatig cosumer iformatio leaflets, by the publicatio of advertorials i the atioal press ad via its website. As part of this work, the Authority maitais details of health isurace products o its website. The iformatio o products is preseted i a cosumer friedly format that facilitates cosumers i comparig their optios. The level of cotacts betwee cosumers ad the Authority icreased agai i 2008 ad the Authority cotiues to assist cosumers i relatio to their dealigs with isurace compaies. I am pleased to recogise the work ad dedicatio of the Members of the Authority durig I would also like to thak the Miister for Health ad Childre, Ms Mary Harey T.D., as well as officials i her Departmet, for their support durig the year. The Health Isurace Authority Aual Report ad Accouts 2008 Fially, the Authority expresses its appreciatio for the work doe by the staff of the Authority ad for the commitmet show by them throughout J. Joyce Chairma 16 Jue

5 2. Membership ad Staff of the Authority Membership The Members of the Authority are appoited by the Miister for Health ad Childre for a term of five years. The curret Members of the Authority are: Mr. Jim Joyce (Chairma) The Health Isurace Authority Aual Report ad Accouts 2008 Mr. Joyce became Chairma of the Authority o 1 February Mr. Joyce is a Fellow of the Istitute of Actuaries ad the Society of Actuaries i Irelad ad served as Presidet of the Society for 1999 / His early career was i the Civil Service edig as Assistat Secretary i the Departmet of Posts ad Telegraphs, followig which he was Executive Director of Telecom Éirea from 1984 to He was Actuarial Cosultat to the Departmet of Eterprise, Trade ad Employmet ad the to the Irish Fiacial Services Regulatory Authority from 1992 to Mr. Dóall Curti Mr. Curti is a fouder ad Seior Parter of Byre Curti Kelly (Certified Public Accoutats). He is a member of the Istitute of Certified Public Accoutats i Irelad. He is a Director o the Board of the Dubli Docklads Developmet Authority. Mr. Curti is also a Director of Chambers Irelad ad a member of the Chartered Istitute of Arbitrators with cosiderable experiece i arbitratio, mediatio ad dispute resolutio. Ms. Mary Doyle Ms. Doyle is the Head of Risk with the Irish Bakig Federatio. She is a Ecoomist with extesive experiece of Irish bakig ad busiess, focused o strategic ecoomic aalysis. She has acted as a Ecoomic Cosultat for the World Bak ad has research experiece i the fields of traiig, tourism ad EU regioal policy. Her qualificatios iclude a Masters Degree i Ecoomics ad a Diploma i Accoutig ad Fiace. She has bee a member of a umber of idustry wide advisory groups, icludig IBEC ad the IBF. 4

6 Mr. Aida O Doell Mr. O Doell is a Actuary. He has over 20 years of experiece i the fiacial services idustry havig worked i a variety of seior roles with Irish Life, Bak of Irelad ad Aglo Irish Bak. Curretly he is Chief Product Officer ad Actuary for Hartford Life s operatios i Europe. He is a Fellow of the Society of Actuaries i Irelad ad also holds a Masters Degree i Busiess Admiistratio from Uiversity College Dubli. Mr. Paul Turpi Maagemet Mr. Turpi is a goverace specialist with the Istitute of Public Admiistratio providig advisory ad traiig services. Before joiig the IPA i 2006, he held a umber of seior positios i bakig ad ivestmet maagemet. Previously he has worked i the public sector, icludig Ecoomic Adviser to Govermet Departmets, with the Natioal Ecoomic ad Social Coucil ad with the Europea Commissio. The Maagemet Team of the Authority is as follows: Mr. Liam Sloya Chief Executive / Registrar The Health Isurace Authority Aual Report ad Accouts 2008 Mr. Eamo Horga Corporate Affairs Maager / Secretary to the Authority 5

7 Mr. Breda Lych Head of Research / Techical Services The Health Isurace Authority Aual Report ad Accouts 2008 Mr. Micheal O Briai Head of Regulatory Affairs The offices of The Health Isurace Authority are located at: Caal House, Caal Road, Dubli 6. Tel: (01) Fax: (01) ifo@hia.ie Website: 6

8 3. Fuctios of the Authority The Authority was established by Miisterial Order o 1 February 2001 uder the Health Isurace Act, 1994 ad operates i accordace with the provisios of this Act, the Health Isurace (Amedmet) Act, 2001, the Health Isurace (Amedmet) Act, 2003 ad the Health Isurace (Amedmet) Act, 2007 ( the Health Isurace Acts ) 1. This legislatio provides for the operatio ad regulatio of the busiess of private health isurace i Irelad. The Europea Uio Third No-Life Isurace Directive ( the Directive ) sets out the requiremets for the iteral market for Member States regardig o-life isurace, icludig health isurace 2. It allows idividual Member States to adopt these requiremets i a maer most appropriate to their particular atioal legal systems ad atioal healthcare systems. The Directive was trasposed ito Irish law through the eactmet of the Health Isurace Acts, which legislated for the four priciples of private health isurace i Irelad, amely, commuity ratig, ope erolmet, lifetime cover ad miimum beefit. The pricipal fuctios of the Authority as provided for i the Health Isurace Acts are: 1. to maitai the Register of Health Beefit Udertakigs ; 2. to advise the Miister (either at his or her ow request or o its ow iitiative) o matters relatig to: (a) the Miister s fuctios uder the Health Isurace Acts; (b) the Authority s ow fuctios; ad (c) health isurace geerally; 3. to moitor: The Health Isurace Authority Aual Report ad Accouts 2008 (a) the operatio of the Health Isurace Acts; (b) the carryig o of health isurace busiess; ad (c) health isurace geerally; The Health Isurace Act, 1994 (Establishmet Day) Order, (S.I. No. 40 of 2001). 2 Coucil Directive 92/49/EEC of 18 Jue 1992 o the coordiatio of laws, regulatios ad admiistrative provisios relatig to direct isurace other tha life assurace ad amedig Directive 73/239/EEC ad 88/357/EEC (third olife isurace Directive). (OJ L 228, , p.1). 7

9 4. to advise ad report to the Miister i relatio to risk equalisatio ad to maage ad admiister ay risk equalisatio scheme as set out uder sectio 12 of the 1994 Health Isurace Act. The Health Isurace (Miscellaeous Provisios) Bill, 2008 was published i December. If eacted, this Bill will assig the followig additioal fuctios to the Authority: to maitai a register of health isurace products; to evaluate ad aalyse returs received from isurers ad issue a report o the evaluatio ad aalysis to the Miister; The Health Isurace Authority Aual Report ad Accouts 2008 to provide advice to the Miister i relatio to the amouts of the levy o Health Isurers ad o the tax relief provided to older persos; to take such actio as it cosiders appropriate to icrease the awareess of members of the public of their rights as cosumers of health isurace ad of health isurace services available to them; ad to carry out fuctios i relatio to the regulatio ad eforcemet of compliace with the Health Isurace Acts. The Authority shall exercise such powers as are ecessary for the performace of its fuctios. The Miister for Health ad Childre ( the Miister ) may assig further resposibilities to the Authority as provided for i the Acts. 3.1 Regulatio Regulatory Structure of the Market The Irish private health isurace regulatory system is based o the key priciples of commuity ratig, ope erolmet, lifetime cover ad miimum beefit ad aims to esure that private health isurace does ot cost more for those who eed it most. The system is ufuded, meaig that there is o fud built up over the lifetime of a isured perso to cover their expected claims cost. Istead, the moey cotributed by isured people is pooled by each isurer ad the cost of claims i ay give year take from the pool. It is i this cotext that the cocept of commuity ratig must be uderstood. This meas that the level of risk that a particular cosumer poses to a isurer does ot affect the premium paid. I other words, everybody is charged the same premium for a particular pla, irrespective of age, geder ad the curret or likely future state of their health subject to exceptios i respect of childre uder 18 years of age, studets i full time educatio ad members of group schemes. 8

10 Ope erolmet ad lifetime cover mea that, except i very limited circumstaces specified i legislatio, health isurers must accept all applicats for health isurace ad all cosumers are guarateed the right to reew their policies regardless of their age or health status. Uder the Miimum Beefit Regulatios, all isurace products that provide cover for ipatiet hospital treatmet must provide a certai miimum level of beefits. It is cosidered ecessary to regulate the miimum level of beefits because of the complex ad specialist ature of private health isurace products which, without regulatio, could result i cosumers beig provided with products that do ot provide a sufficietly comprehesive level of cover Risk Equalisatio Risk equalisatio is a process that aims to equitably eutralise differeces i isurers claim costs that arise due to variatios i the health status of their members. Where it applies, risk equalisatio ivolves trasfer paymets betwee health isurers to spread some of the claims costs of high-risk members amogst all the private health isurers i the market i proportio to their market share. Risk equalisatio is a commo mechaism i coutries with commuity rated health isurace systems. Risk Equalisatio Scheme, 2003 I 2003, the Miister for Health ad Childre itroduced a Risk Equalisatio Scheme uder the Health Isurace Acts. Health isurers were required to make returs to the Authority every six moths. The Authority was required to evaluate ad aalyse the returs made to it ad provide a report to the Miister givig details of its evaluatio ad aalysis. Uder the Scheme, paymets would oly commece if the Authority recommeded that they be commeced ad the Miister accepted the Authority s recommedatio. The Health Isurace Authority Aual Report ad Accouts 2008 I May 2005, BUPA Isurace Limited commeced legal proceedigs agaist the Risk Equalisatio Scheme. While paymets uder the Risk Equalisatio Scheme had ot bee commeced at this time, the High Court ordered that a stay o the trasfer of fuds uder the Risk Equalisatio Scheme would apply util the legal proceedigs had cocluded. The Authority recommeded, i October 2005, that risk equalisatio paymets be commeced. The Miister, havig cosidered the Authority s report ad submissios made to her, decided to commece paymets with effect from 1 Jauary However, o moey was trasferred due to the stay o paymets put i place by the High Court. I November 2006, the High Court upheld the Scheme. However, BUPA appealed to the Supreme Court. The Supreme Court grated BUPA s appeal o 16 July 2008 ad the Risk Equalisatio Scheme, 2003 was set aside.

11 The Authority had origially bee amed by BUPA as a respodet i these proceedigs. Shortly after the proceedigs commeced, the Authority was released from them. As o actio of the Authority was successfully impuged by BUPA, the Authority sought ad was awarded its costs from BUPA. Other Legal Proceedigs Apart from the legal proceedigs referred to above, there were four other sets of legal proceedigs challegig the Risk Equalisatio Scheme, 2003: The Health Isurace Authority Aual Report ad Accouts BUPA challeged a decisio by the Europea Commissio that the Risk Equalisatio Scheme did ot costitute a State Aid. This case was heard i the Europea Court of First Istace. I February 2008, the Court dismissed BUPA s claim statig that such a mechaism as the scheme is ecessary ad proportioate i the Irish private health isurace market. 2. I Jauary 2006, BUPA sought a judicial review challegig the October 2005 recommedatio of the Authority ad the December 2005 decisio of the Miister to commece risk equalisatio paymets. 3. I May 2007, Qui Healthcare commeced proceedigs i the High Court challegig the Health Isurace (Amedmet) Act, These proceedigs became moot followig the 2008 Supreme Court judgmet. 4. I July 2007, Qui Healthcare was grated leave for a judicial review of the validity of the Risk Equalisatio Scheme. These proceedigs became moot followig the 2008 Supreme Court judgmet. Risk Equalisatio Reports Submitted i 2008 Report Submitted to the Miister i Jauary 2008 The Health Isurace Acts 1994 to 2007 provide that oce a requiremet to make paymets uder the Risk Equalisatio Scheme arises, the Authority shall make a aual report to the Miister. The report should evaluate the operatio of the Scheme with respect to its effects o the iterests of health isurace cosumers. As the requiremet to make a paymet uder the Scheme did ot arise, the Authority was ot required to make such a aual report. However, the Authority cosidered that it was beeficial to iform the Miister o a regular basis i relatio to its evaluatio of the operatio of the Scheme with respect to its effects o the iterests of health isurace cosumers. A report was issued by the Authority i Jauary 2008 coverig the eightee moth time period from 1 Jauary 2006 to 30 Jue

12 Iter alia, the report idicated that, durig the period: Isurers with lower risk profiles cotiued to retai a competitive advatage over Vhi Healthcare as a result of those risk profiles ad cotiued to grow market share. There was a greater fluidity of pricig structures i the market, leadig i geeral to a more competitive market place. The sigificace of risk profile differeces betwee isurers i the market cotiued to grow. If implemeted the Risk Equalisatio Scheme would have oly partially compesated isurers with higher risk profiles. The report also advised that the implemetatio of the Scheme ad the makig of paymets were i the best overall iterests of health isurace cosumers. Report Followig the Aalysis of Returs Received i Jauary 2008 The ith set of returs from isurers, which was for the period 1 July 2007 to 31 December 2007, was received by the Authority at the ed of Jauary The Authority reported to the Miister o these returs i April The Report agai showed that the cost of health isurace claims varies very sigificatly with age ad that the age profiles of isurers memberships vary sigificatly i the Irish market. Specifically the report showed that claim costs for people over the age of 70 are o average 7 times the level of claim costs for adults uder the age of 40 ad Vhi Healthcare has 7 times the proportio of members over the age of 70 that its competitors have. Updated Guide to the Risk Equalisatio Scheme, 2003 A Updated Guide to the Risk Equalisatio Scheme, 2003 was completed by the Authority ad issued to isurers i March The Health Isurace Authority Aual Report ad Accouts 2008 Cosultatio Process with Isurers o Maximum Equalised Beefits The Maximum Equalised Beefits i the First Schedule of the Risk Equalisatio Scheme, 2003 had remaied uchaged sice the scheme bega i A review of these limits commeced i 2008 but was termiated followig the Supreme Court decisio. Cosultatio o Prospective Risk Equalisatio I 2007, the Miister requested that the Authority examie the feasibility of a prospective risk equalisatio scheme. 11

13 Work was at a advaced stage i relatio to draftig a cosultatio paper whe the Supreme Court gave judgmet o the legality of the Risk Equalisatio Scheme i July. The project was the discotiued. Followig a request from the Departmet of Health ad Childre, the Authority provided its prelimiary views i relatio to prospective risk equalisatio. The Authority advised that, uder a prospective system, there would be some additioal certaity for isurers i projectig the level of risk equalisatio trasfers, but this would come at the expese of reduced accuracy i balacig the impact of risk profile differeces betwee isurers The Health Isurace (Miscellaeous Provisios) Bill, 2008 The Health Isurace Authority Aual Report ad Accouts 2008 Followig the Supreme Court judgmet i July 2008 the Authority wrote to the Miister for Health ad Childre i August 2008 providig advice i relatio to the cosequeces of the Supreme Court judgmet. The Authority advised that, i the Irish commuity rated market without Risk Equalisatio, youger cosumers (those uder the age of 50) are, o average, profitable, while those over the age of 50 are uprofitable. I particular, those over the age of 70 ted to be extremely uprofitable. I the absece of Risk Equalisatio, the followig cosequeces are likely (i poit of fact, the market has bee tredig i some of these directios for some time already): Isurers will desig ad market products so as to reduce their attractio to older customers. Isurers will attempt to segmet their risks so that older customers are sold products that cost more or iclude a lower level of beefits. Isurers with more favourable risk profiles will be protected from real competitio. Product promotio will feature risk selectio ad marketig sped rather tha product quality ad service. The most successful isurers will be those that ca best select ad segmet risk, ot ecessarily those that provide the best service. Isurers with worse risk profiles will be obliged to charge higher premiums or icur losses. Switchig of youger customers may exacerbate their problems. At the time, the Authority suggested that alteratives for addressig these issues would be either to recostitute the Risk Equalisatio Scheme i some form or itroduce some form of levy-based or tax-based loss compesatio system. The Authority also recommeded a rage of other measures to support commuity ratig. Followig this iitial memoradum, the Authority cotiued to provide advice to the Miister ad the Departmet o how commuity ratig could be supported. This process culmiated i the publicatio of the Health Isurace (Miscellaeous Provisios) Bill i December

14 Iterim Taxatio Measures to Support Commuity Ratig The Health Isurace (Miscellaeous Provisios) Bill, 2008 provides for the itroductio of a system of age-based tax credits to support commuity ratig. The Bill provides that Ope Membership Isurers will receive higher premiums i respect of isurig older people, but older people will receive tax credits equal to the amout of the additioal premium so that all people will cotiue to pay the same amout for their health isurace. I this way commuity ratig is maitaied but isurers receive higher premiums i respect of older people to partly compesate for the higher level of claims. The tax credits will be 200 for those aged 50 to 59; 500 for those aged 60 to 69; 950 for those aged 70 to 79 ad 1,175 for those aged over 80. The tax credits start from the 2009 reewal date. I order to fud the system, ope membership isurers will pay a levy i respect of all idividuals covered for health isurace. I 2009, this will be 160 for adults ad 53 for childre. The commuity ratig levy ad tax credits, like the existig tax relief at source of 20% of premium, will be admiistered by the health isurace udertakigs. The measures will be i place for three years i order to allow time for a comprehesive risk equalisatio / loss compesatio system to be put i place. Prior to the publicatio of the Bill, the Authority reviewed the draft system. The Authority advised that the proposed approach was reasoable as a iterim measure to address the issues that arose for a commuity rated market i the absece of risk equalisatio. The Authority cosidered that the suggested parameters for the system were objectively justifiable ad proportioate. The Authority also advised that the proposed system provides for a lower level of support for older lives tha would be required i order to adequately address the issues that arise for a commuity rated market i the loger term. This is because the proposed system does ot ivolve the level of sophisticatio of a comprehesive risk equalisatio / loss compesatio system ad, as a cosequece, the level of paymet for which proportioality could be satisfactorily established is lower. I the loger term, the Authority cosiders that i order to protect the core priciples of commuity ratig, alog with fair competitio, a comprehesive risk equalisatio / loss compesatio system will be required. I 2009, the Departmet of Health & Childre requested that the Authority commece draftig a comprehesive system. The Health Isurace Authority Aual Report ad Accouts

15 Amedmets to the Health Isurace Acts The Authority also provided advice to the Miister o a rage of other measures to support commuity ratig ad facilitate competitio i the health isurace market. I this cotext, the Health Isurace (Miscellaeous Provisios) Bill 2008 icludes the followig amedmets to the Health Isurace Acts: The Health Isurace Authority Aual Report ad Accouts 2008 The Bill specifies the priciple objective of the Health Isurace Acts, which is liked to esurig that o discrimiatio applies o the basis of age or health status i relatio to the provisio of health isurace services. The Act prohibits registered udertakigs from egagig i practices that avoid the achievemet of the priciple objective. Isurers will be required to offer health isurace cotracts for a period of ot less tha 31 days. Isurers will be required to submit ew cotracts to the Authority 20 workig days before offerig them to potetial customers. The Authority shall establish a Register of Health Isurace Cotracts ad the Register shall be available for ispectio by the public free of charge. Isurers will be required to make iformatio returs to the Authority to eable it to perform its fuctios of advisig the Miister uder the Health Isurace Acts. The Miister may prescribe iformatio to be icluded i offers of health isurace cotracts ad advertisemets. No ew Restricted Membership Udertakigs may provide cover for i-patiet hospital services. The Authority will have the power to issue eforcemet otices where it is of the opiio that a isurer is cotraveig a provisio of the Health Isurace Acts or is likely to do so agai. The fuctios of the Authority are expaded to iclude To take such actio as it cosiders appropriate to icrease the awareess of members of the public of their rights as cosumers of health isurace ad of health isurace services available to them. The amedmets sigificatly icrease the fuctios of the Authority, particularly i relatio to the providig of cosumer iformatio ad eforcig compliace with the Health Isurace Acts. 14

16 3.1.4 The Register of Health Beefit Udertakigs The Authority is resposible for the maiteace of The Register of Health Beefits Udertakigs ( the Register ). Sectio 14 of the Health Isurace Acts, provides that ay health isurer carryig o the busiess of health isurace i Irelad is required to register with ad obtai a certificate from the Authority. Applicatio for reewal of registratio is required o a aual basis. Upo registratio, a certificate is issued to the health isurer, cofirmig that the isurer may offer private health isurace i accordace with the terms of its rules ad withi the relevat legislatio. There are two types of health isurace udertakigs i Irelad. Ope Membership Udertakigs are health isurers that must accept all cosumers who wish to obtai private health isurace (subject to certai limited restrictios as specified i the legislatio). The Restricted Membership Udertakigs are maily vocatioal schemes, membership of which is restricted to employees of particular orgaisatios. BUPA trasferred its busiess to Qui Healthcare durig BUPA did ot reew their registratio i 2008 ad, as a cosequece, are o loger icluded o the Register. O 15 May 2008, Hiberia Group Plc ( Hiberia ) purchased a 70% share i VIVAS Isurace Limited, tradig as VIVAS Health. The registered udertakig was reamed Hiberia Health Isurace Limited. Two Restricted Membership Udertakigs, CIE Clerical Staff Hospital Fud ad Motorola Medical Aid Society ceased to be icluded o the Register of Health Beefit Udertakigs i Udertakigs o The Register of Health Beefits Udertakigs at 31 December 2008 are listed i Appedix B. The Health Isurace Authority Aual Report ad Accouts Research ad Advice Commissioed Research I 2007, the Miister requested that the Authority iitiate a process of cosultatio o defiig the level of health isurace which should be subject to commuity ratig. 15

17 The Authority appoited FGS McClure Watters ad their specialist parter, York Health Ecoomics Cosortium as exteral advisers to provide support i relatio to this project. Work was at a advaced stage i relatio to draftig a cosultatio paper whe the Supreme Court gave judgmet o the legality of the Risk Equalisatio Scheme i July. The project was the suspeded. Followig a request from the Departmet of Health ad Childre, the Authority provided its prelimiary views i relatio to whether there should be a level of health isurace cover, above which cover is ot subject to commuity ratig. The Authority advised that, i practice, there would be sigificat difficulties i protectig commuity ratig i a mixed commuity rated / risk rated market. The Health Isurace Authority Aual Report ad Accouts 2008 Research o the Health Isurace Market I 2007, the Authority commissioed Isight Statistical Cosultig to carry out a qualitative ad quatitative research study of the private health isurace market i Irelad with the followig specific requiremets: (a) to provide a clearer perspective of the private health isurace market; (b) to idetify key treds over the three surveys coducted i 2002, 2005 ad 2007; ad (c) to idetify effects of recet chages i the health isurace market. Some of the issues that were specifically idetified icluded more iformatio o the role of employer-based group schemes ad switchig behaviour betwee isurers. The research work icluded a atioal face-to-face survey of 1,000 adults, a employer survey of 200 admiistrators of private health isurace group schemes ad a qualitative research programme comprisig 6 cosumer focus groups. The report was provided to the Miister i April 2008 ad subsequetly published. The priciple fidigs of the research were as follows: Approximately oe i every two adults has private health isurace. The ewer etrats to the market (Qui Healthcare ad Hiberia Health) cotiue to gai market share. Cosumers value their health isurace cover highly ad that there was a high ad growig level of satisfactio amog cosumers with regard to health isurace. Cosumers of health isurace raked it as the secod most importat employmet beefit (behid a pesio). 16

18 84% of the large employers i the sample that operate health isurace schemes stated that health isurace is a importat beefit for employees. A majority of the workplace group schemes sampled were paid for (fully or partially) by the employer. Cosumer awareess of their rights ad their kowledge of their health isurace products had icreased sice the 2005 survey Legislatio VHI (Amedmet) Act, 2008 The Volutary Health Isurace (Amedmet) Act 2008 was eacted i April. The mai purpose of the Act is to cofer additioal fuctios o the Volutary Health Isurace Board ad to allow it to create subsidiaries with a view to obligig it to apply for a authorisatio for a relevat subsidiary as a o-life isurer from the Fiacial Regulator. The provisios of the Act are broadly cosistet with the advice icluded i the Authority s Report to the Miister o Competitio i the Irish Private Health Isurace Market. The Act provides that Vhi Healthcare acquire sufficiet solvecy fuds for authorisatio by the Fiacial Regulator as a isurace etity by 31 December 2008 or such later date as the Miister may by order appoit. I December 2008, the Miister for Health ad Childre made a Regulatio appoitig 31 March 2009 as the date by which Vhi Healthcare must acquire sufficiet solvecy fuds. The Act also provides for amedmets to the Health Isurace Acts ad the Authority provided advice to the Departmet i relatio to these amedmets. The mai amedmet to the Health Isurace Acts was provisio for the repeal of clause (c) i the defiitio of a health isurace cotract. This clause excludes some types of cotracts of isurace provided by two cash pla providers from the defiitio of a health isurace cotract. The Health Isurace Authority Aual Report ad Accouts Moitorig the Health Isurace Eviromet Product Issues There has bee a substatial icrease i the umber of health isurace products ad product variatios i the marketplace sice early There were over 60 products ad over 100 product variatios i total i the marketplace at the ed of The Authority reviews all products i the marketplace o a ogoig basis for compliace with the health isurace legislatio ad Regulatios. 17

19 Some of the otable developmets sice early 2005 iclude the followig: A icrease i the umber of primary care products that either stad-aloe or are product add-os; A icrease i the umber of products marketed towards occupatioal groups or idividual compaies employees; Sigificat claims excesses o some products; Large variatios i materity care cover betwee differet products; The Health Isurace Authority Aual Report ad Accouts 2008 The itroductio of products that provide cover for a private room i public hospitals but oly cover a limited umber of private hospitals; ad Products ad terms that are oly available for a very short time ad that are oly marketed to certai groups. The Authority has advised the Miister that the large icrease i product variatios could be used by isurers to segmet their risks, i.e. differet product variatios could be marketed to differet age groups. I practice, this eables the isurer to charge sigificatly differet premiums for similar products depedig o the age profile of the membership of the product variatio. The Authority cosiders that such practices may serve to udermie commuity ratig. While the Health Isurace (Miscellaeous Provisios) Bill 2008 cotais some measures iteded to address this issue, the practice is likely to cotiue ad evolve i the absece of a comprehesive risk equalisatio system. Lifetime Commuity Ratig Lifetime commuity ratig is a system whereby isurers may charge a higher premium to those who take out health isurace for the first time later i life. Uder Lifetime Commuity Ratig a 70 year old perso who has bee isured sice the age of 30 would pay the same premium as a 30 year old but a 70 year old who was ot previously isured could be charged a higher premium. The Authority cosiders that the itroductio of lifetime commuity ratig would reduce adverse selectio i the market. The Health Isurace Acts provide for the itroductio of Regulatios establishig a system of lifetime commuity ratig i Irelad. Draft Regulatios have bee circulated to the isurers for cosideratio. I November 2008, the Miister reiterated her itetio to itroduce Lifetime Commuity Ratig Regulatios. Ope Erolmet I view of the proposed itroductio of lifetime commuity ratig, it is also proposed that the Ope Erolmet Regulatios will be ameded i relatio to the provisios allowig for waitig periods to vary with age at etry. Draft Regulatios have bee circulated to isurers for cosideratio. 18

20 Miimum Beefits The Authority moitors compliace with the Miimum Beefit Regulatios, which are importat for the effectiveess of commuity ratig ad for cosumer protectio. O occasio, the Authority has raised issues cocerig the Regulatios with a isurer. I its 1999 White Paper o Private Health Isurace, the Govermet idicated its itetio to amed the curret system of Miimum Beefits. I 2008, i its memoradum to the Miister i relatio to the cosequeces of the Supreme Court judgmet o the Risk Equalisatio Scheme, the Authority advised that i view of icreases i healthcare costs ad the itroductio of ew medical treatmets, the Miimum Beefit Regulatios require updatig. 3.3 Cosumer Iterests The iterests of cosumers are of key importace to the Authority. The Authority assesses the effect of ay regulatios or ew legislatio o cosumers. The Authority also aims to icrease cosumer awareess of their rights ad assist them i uderstadig health isurace products. Uder its fuctio to moitor the operatio of health isurace busiess, the Authority moitors the provisio of iformatio to cosumers by isurers as well as moitorig compliace with the Health Isurace Acts Cosumer Queries ad Complaits The Authority assists cosumers by aswerig queries regardig health isurace ad by assistig them i resolvig complaits agaist isurers. I 2008, the volume of queries ad complaits rose to over 600. The icrease i the level of queries was most marked from the ed of November owards, whe the rate of cotacts doubled. The level of cotacts has cotiued at this higher rate. The icrease i cotacts coicided with the iclusio of cosumer iformatio with reewal otices, the placig of advertorials i the press ad the wider distributio of the Health Isurace Authority s cosumer iformatio booklets. The Health Isurace Authority Aual Report ad Accouts 2008 Topics that were frequetly raised with the Authority were: geeral queries regardig health isurace cotracts ad waitig periods; rights i relatio to switchig isurers; service stadards of isurers; the cost of private health isurace; ad requests for the Authority s iformatio publicatios. 19

21 Durig 2008, the Authority iterveed successfully o behalf of cosumers i relatio to problems they were ecouterig with their isurace compay. Two examples of the types of cases addressed by the Authority are set out below. Case Study 1 The Health Isurace Authority Aual Report ad Accouts 2008 A cosumer had to be hospitalised after a icidet while o holidays i Bulgaria. The hospital advised they kew of her isurer ad were happy to treat her, however, the cosumer later received a bill for the treatmet after her retur to Irelad. The isurer advised the cosumer that the bill would be paid, yet it remaied upaid despite several equiries by the cosumer. She was the advised she would have to sed her claim to a overseas office. Whe the cosumer received a fial bill from Bulgaria ad a threat of legal actio she was advised by the isurer that they did t cover Bulgaria hospitals. She the cotacted the Health Isurace Authority. The isurer commeced a ivestigatio upo beig requested to do so by the Authority ad cocluded a error had bee made, both i the advice give to the cosumer ad i the o-paymet of the bill. All issues were resolved to the cosumer s satisfactio ad the isurer committed to reviewig its services. Case Study 2 A cosumer uderwet a treatmet for which she could claim 250 off the total cost of the treatmet from her health isurer. The treatmet had recetly bee reduced i price from 750 to 600 ad the isurer ow said they would oly cover 100 of the cost. The cosumer said she was aware the discout was ot available i cojuctio with promotioal offers, but the price had bee chaged rather tha reduced temporarily. The isurer claimed there had bee a chage i policy. The Health Isurace Authority cotacted the isurer ad asked how the terms of the cosumer s cotract could be chaged mid-term. The isurer ivestigated the claim ad ackowledged the cosumer had bee misiformed ad would be reimbursed the full Cosumer Iformatio The Miister for Health ad Childre requested that the Authority give cosideratio to the questio of improvig cosumer awareess of their rights to move betwee isurers uder the existig regulatory framework ad to take steps to highlight the portability rights of the isured. 20

22 I 2008, the Authority reached a agreemet with isurers to provide iformatio o cosumer rights, icludig the right to switch isurer, to cosumers with reewal otices. I this way cosumers are provided with iformatio o their rights whe the iformatio is most relevat to them. The Authority also provides cosumer iformatio through the media, through press advertisemets / advertorials, through its website ad by distributig its cosumer iformatio booklets through 1,200 GP surgeries ad hospitals, Citizes Iformatio Cetres ad other relevat locatios Website I 2008, the Authority cotiued to improve the cotet of its website for users, particularly i the area of cosumer iformatio. The Authority also improved its website accessibility through the applicatio of a text-to-speech software program which allows web pages to be read aloud to the user, as well as readig PDF s, hyperliks ad picture tags. This software greatly icreases accessibility to users with dyslexia, learig disabilities, mild visual impairmets or for people where Eglish is ot their first laguage. The Health Isurace Authority Aual Report ad Accouts

23 4. Corporate Affairs 4.1 Strategy The Authority was established as a idepedet regulator for the private health isurace market i Irelad. I fulfillmet of this role, the Authority developed its work pla to iclude a visio, missio ad values. The Visio of the Authority The Health Isurace Authority Aual Report ad Accouts 2008 The visio of the Authority is to beefit the commo good by facilitatig a competitive health isurace market whilst preservig commuity ratig, ope erolmet ad lifetime cover. The Missio of the Authority The missio of the Authority is to: moitor ad research health isurace geerally; advise the Miister o health isurace geerally; make recommedatios o the implemetatio or otherwise of risk equalisatio ad maagig ad admiisterig ay Risk Equalisatio Scheme; implemet other relevat regulatios as prescribed; safeguard the iterests of curret ad future health isurace cosumers; ad advise o ad implemet measures to support commuity ratig. The Values of the Authority The Authority has adopted values to apply i its activities. The values of the Authority are to: maitai its idepedece; act always with impartiality ad itegrity; work i a professioal ad effective way; meet its uique challeges by beig receptive to ew ideas ad suggestios from all sources ad iovative i its approach; maitai trasparecy i all its work; ad value its people. 22

24 4.2 Corporate Goverace Corporate Goverace Code of Practice The Authority prepared a Code of Practice for the Goverace of the Health Isurace Authority based o the Code of Practice for the Goverace of State Bodies issued by the Departmet of Fiace i March Ethics i Public Office The Authority is icluded i Statutory Istrumet No. 699 of 2004 for the purposes of the Ethics i Public Office Acts, 1995 ad The Members of the Authority ad relevat staff have fulfilled their obligatios uder this legislatio. Aual Report ad Accouts The Aual Accouts for 2008 were prepared ad submitted to the Office of the Comptroller ad Auditor Geeral ( the C&AG ) for audit. These Accouts have bee audited ad approved by that office ad are set out i this Aual Report at Sectio 5. The Authority adheres to corporate goverace documetatio issued by the C&AG i 2003 settig out guidelies ad stadards for submissio of accouts for audit. Official Laguages The Authority is compliat with the Official Laguages legislatio ad maitais cotact with the Departmet of Commuity, Rural ad Gaeltacht Affairs i this regard. Freedom of Iformatio The Health Isurace Authority came withi the scope of the Freedom of Iformatio Act with the passage of the Freedom of Iformatio Act 1997 (Prescribed Bodies) Regulatios 2006, effective from 31 May The Health Isurace Authority Aual Report ad Accouts 2008 I additio to processig requests made uder the Freedom of Iformatio Acts as they are received, the Authority published two booklets, A Guide to the Fuctios of ad Records Held by the Authority ad A Guide to the Rules, Procedures, ad Practices of the Authority, which together guide applicats through the Freedom of Iformatio process. The guides are compiled i accordace with the Freedom of Iformatio Acts ad are published o the Authority s website. 23

25 4.3 Relatioship with Stakeholders Throughout 2008 the Authority has edeavoured to maitai appropriate professioal relatioships with stakeholders i the Irish private heath isurace market ad has bee receptive to suggestios ad ideas from all sources. I order to do this, the Authority met regularly with stakeholders to discuss matters that fall withi the Authority s areas of resposibility ad, isofar as is possible, maitaied trasparecy i its work. These stakeholders iclude cosumers, isurers, professioal bodies ad other regulators. Commuicatios Strategy The Health Isurace Authority Aual Report ad Accouts 2008 The Authority operates a policy of opeess, cosultatio ad discussio with relevat iterested parties. The Authority welcomes commuicatio with cosumers, stakeholders ad other iterested parties i the provisio of a regulatory service ad i the performace of its fuctios. 4.4 Resources Staff The Authority has sactio for ie staff. Fudig The operatios of the Authority are fuded by a levy o Registered Udertakigs i accordace with Sectio 17 of the Health Isurace Act, The Levy Regulatios itroduced by the Miister i 2001 set the rate to be paid at 0.14% of premium icome of registered udertakigs, which is payable o a quarterly basis. Registered udertakigs are also obliged to submit details of premium icome ad umbers of isured persos. These statistics are summarised i Appedix A. The Register of Health Beefits Udertakigs as at 31 December 2008 is set out i Appedix B. 3 The Health Isurace Act, 1994 (Sectio 17) Levy Regulatios, 2001 (S.I. No. 255 of 2001). 24

26 Report ad Accouts 2008

27 5. Report ad Accouts for the year 1 Jauary 2008 to 31 December 2008 To the Miister for Health ad Childre I accordace with the terms of Sectio 32(2) of the Health Isurace Act, 1994, The Health Isurace Authority presets its Report ad Accouts for the twelve-moth period eded 31 December The Health Isurace Authority Aual Report ad Accouts 2008 Cotets Authority Iformatio 27 Report of the Comptroller ad Auditor Geeral 28 Statemet o Iteral Fiacial Cotrol 30 Statemet of Resposibilities of the Authority 32 Statemet of Accoutig Policies 33 Fiacial Statemets 35 26

28 Authority Iformatio Members of the Authority J. Joyce (Chairma), term commeced February 2006 Dóall Curti, term commeced April 2006 Mary Doyle, reappoited February 2006 Aida O Doell, reappoited February 2006 Paul Turpi, term commeced October 2007 Chief Executive / Registrar Liam Sloya Secretary Nora Rahill to February 2008 Eamo Horga from March 2008 Bakers AIB plc. 40 / 41 Westmorelad Street Dubli 2 Bak of Irelad Raelagh Dubli 6 Bak of Scotlad (Irelad) Bak of Scotlad House St. Stephe s Gree Dubli 2 The Health Isurace Authority Aual Report ad Accouts 2008 Auditors Comptroller ad Auditor Geeral Dubli Castle Dubli 2 Offices Caal House Caal Road Dubli 6 27

29 Report of the Comptroller ad Auditor Geeral for presetatio to the Houses of the Oireachtas I have audited the fiacial statemets of the Health Isurace Authority for the year eded 31 December 2008 uder the Health Isurace Act The fiacial statemets, which have bee prepared uder the accoutig policies set out therei, comprise the Statemet of Accoutig Policies, the Icome ad Expediture Accout, the Balace Sheet ad the related otes. The Health Isurace Authority Aual Report ad Accouts 2008 Respective Resposibilities of the Authority ad the Comptroller ad Auditor Geeral The Authority is resposible for preparig the fiacial statemets i accordace with the Health Isurace Act 1994, ad for esurig the regularity of trasactios. The Authority prepares the fiacial statemets i accordace with Geerally Accepted Accoutig Practice i Irelad. The accoutig resposibilities of the Members of the Authority are set out i the Statemet of Resposibilities of the Authority. My resposibility is to audit the fiacial statemets i accordace with relevat legal ad regulatory requiremets ad Iteratioal Stadards o Auditig (UK ad Irelad). I report my opiio as to whether the fiacial statemets give a true ad fair view, i accordace with Geerally Accepted Accoutig Practice i Irelad. I also report whether i my opiio proper books of accout have bee kept. I additio, I state whether the fiacial statemets are i agreemet with the books of accout. I report ay material istace where moeys have ot bee applied for the purposes iteded or where the trasactios do ot coform to the authorities goverig them. I also report if I have ot obtaied all the iformatio ad explaatios ecessary for the purposes of my audit. I review whether the Statemet o Iteral Fiacial Cotrol reflects the Authority s compliace with the Code of Practice for the Goverace of State Bodies ad report ay material istace where it does ot do so, or if the statemet is misleadig or icosistet with other iformatio of which I am aware from my audit of the fiacial statemets. I am ot required to cosider whether the Statemet o Iteral Fiacial Cotrol covers all fiacial risks ad cotrols, or to form a opiio o the effectiveess of the risk ad cotrol procedures. I read other iformatio cotaied i the Aual Report, ad cosider whether it is cosistet with the audited fiacial statemets. I cosider the implicatios for my report if I become aware of ay apparet misstatemets or material icosistecies with the fiacial statemets. 28

30 Basis of Audit Opiio I the exercise of my fuctio as Comptroller ad Auditor Geeral, I coducted my audit of the fiacial statemets i accordace with Iteratioal Stadards o Auditig (UK ad Irelad) issued by the Auditig Practices Board ad by referece to the special cosideratios which attach to State bodies i relatio to their maagemet ad operatio. A audit icludes examiatio, o a test basis, of evidece relevat to the amouts ad disclosures ad regularity of the fiacial trasactios icluded i the fiacial statemets. It also icludes a assessmet of the sigificat estimates ad judgmets made i the preparatio of the fiacial statemets, ad of whether the accoutig policies are appropriate to the Authority s circumstaces, cosistetly applied ad adequately disclosed. I plaed ad performed my audit so as to obtai all the iformatio ad explaatios that I cosidered ecessary i order to provide me with sufficiet evidece to give reasoable assurace that the fiacial statemets are free from material misstatemet, whether caused by fraud or other irregularity or error. I formig my opiio I also evaluated the overall adequacy of the presetatio of iformatio i the fiacial statemets. Opiio I my opiio, the fiacial statemets give a true ad fair view, i accordace with Geerally Accepted Accoutig Practice i Irelad, of the state of the Authority s affairs at 31 December 2008 ad of its icome ad expediture for the year the eded. I my opiio, proper books of accout have bee kept by the Authority. The fiacial statemets are i agreemet with the books of accout. The Health Isurace Authority Aual Report ad Accouts 2008 Gerard Smyth For ad o behalf of the Comptroller ad Auditor Geeral 21 May