The European Commission has approved a new Irish health insurance scheme that includes both levies and tax-relief measures designed to decrease the risk differentials for health insurers between old and young customers.
The scheme gives insured individuals tax relief that increases with age and is paid directly to that person's insurer. This relief is financed by a flat rate levy on all insurers, payable after each insured life. The effect of these measures is that they reduce the cost of insuring older lives and increase the cost of insuring younger ones.
The Commission found that although the tax relief is directed at individuals, it has an effect on private health insurers, particularly those with higher risk profiles, and therefore constitutes State aid. However, the Commission decided that the scheme was compatible with Article 86(2) of the Treaty because i) private health insurance qualifies as a public service and ii) the Irish Government had introduced a mechanism to prevent the overcompensation of insurers.