Oxera’s economic analysis is key to the Irish Health Insurance Authority’s state aid approval

Oxera’s economic analysis is key to the Irish Health Insurance Authority’s state aid approval

On 3 March 2016, the Irish Health Insurance Authority received the European Commission's approval for its scheme to transfer state funding to health insurers, to enable them to provide private medical insurance. As key economic adviser on state aid matters to the Authority, we helped with its submissions to the Commission and prepared the economic and financial evidence to demonstrate that the scheme was in line with state aid rules. In particular, the Oxera team, led by Senior Consultant, Nicole Robins, designed a methodology for assessing the profitability of the health insurers in Ireland, which was approved by the Commission.

As a result of our involvement, the Commission concluded that the scheme was compatible with state aid rules under the Framework for Services of General Economic Interest (SGEI).

Under the SGEI Framework, it needed to be shown that the state support did not cause the profitability of the health insurers to exceed a ‘reasonable’ level—in other words, that it did not lead to overcompensation. The Oxera team designed a methodology for assessing the profitability of the health insurers in Ireland, which was approved by the Commission. We also undertook in-depth analysis of the profitability of the one Irish health insurer that is a net beneficiary under the scheme, as well as a detailed assessment of the appropriate forward-looking benchmark for assessing ‘reasonable’ profit. On this basis, the Commission concluded that it was unlikely that this health insurer would be overcompensated in the future.

The Commission’s Decision approved the scheme until 31 December 2020. The case also sets a precedent for the state aid assessment of similar arrangements in the insurance sector.

For information on how we can help you on state aid matters, read more here

Read the European Commission’s Decision here:
http://ec.europa.eu/competition/state_aid/cases/262379/262379_1730677_40_2.pdf
 

Posted: 07/03/2016