Mr. Jim Dowdall:

I thank the Chairman and the committee for providing GloHealth with the opportunity to discuss the critical issues facing the health insurance market. I am joined by my colleague, Ms Teresa Kelly Oroz, our legal and regulatory director.

Government policy is to implement a system of universal health insurance. For a transition to universal health insurance to work, the current health insurance market must be kept affordable and competitive. However, over the past four years, health insurance has become less affordable and, as a result, the market has reduced in size, with more than 174,000 previously insured people now dependent on the public health system.

Members of this committee know more about people's fears and concerns than anyone on this side of the table. At weekly clinics they meet constituents who cannot pay mortgages, struggle with bills, have reduced earnings and are worried about the health and welfare of their families. However, today the committee has the opportunity to do something for the 2.1 million people who have health insurance, for those who are dependent on the over-burdened health system and for the 6,000 people per month who have had to or have been forced to give up their health insurance. They are giving it up, not because they want to cease cover but because they cannot afford it.

Health insurance has become unaffordable for many because of a failed policy relating to the implementation of the health insurance levy. Through its work today, this committee can shine a light on this failed policy. This policy may have been sustainable in the Celtic tiger years, when the health insurance market was growing year on year, but it is certainly the wrong policy for the recession-hit Ireland of today. This failed policy is driving consumers away from private health insurance and risks creating a vicious circle where, in the end, health insurance will be unaffordable for everybody.

GloHealth firmly supports the concept of community rating and intergenerational solidarity. Community rating can only work if it is sustainable, and it can only be sustainable if private health insurance is affordable. The facts do not lie. The health insurance levy has increased by almost 80% in just three years. In 2012, the levy adds €760 to the annual health insurance cost of a family of two adults and two children. In many cases, the levy accounts for approximately 40% of the cost of health insurance.

Let us be honest - the Government levy is a stealth tax on health insurance customers. In recent years it has driven a vicious circle of rising premiums, leading to more than 174,000 cancellations by young families and individuals who are impacted on most by the recession. According to the Health Insurance Authority, there has been a 12% reduction in the number of policies which include children. As the pool of younger, healthier members gets smaller, the cost of insurance for those remaining inevitably increases. Moreover, fewer patients with health insurance leads to greater pressure on the public health system which is under huge strain and over budget. The committee is dealing with the consequences of that strain on a weekly basis. It is critical for the economic well-being of the country that we maintain our competitiveness. Health insurance is viewed as a core employment benefit by most large multinationals in Ireland, but the levy is forcing up their labour costs.

We need a change of direction and I call on the committee to lead that change. Having resolved before the meeting to offer solutions, as well as emphasising the challenges, I will set out three proposals for action. First, we urge the Minister to reduce or, at a minimum, freeze the health insurance levy. Research by the Health Insurance Authority suggests that if the levy was reduced, lapsed policyholders would come back into the market. We all recognise that an increase in the younger population base will make health insurance more affordable for everybody. A further increase in the levy is not necessary to subsidise further an already profitable VHI.

Second, we recommend that the Minister exempt children from the levy. It is currently set at €95 per child per annum, which is almost the same as the household charge. At a time when there is so much emphasis on children's health and children's rights, it seems truly unjust to impose a tax on children to support the health costs of adults. Abolishing the levy on insured children would make health insurance more affordable for hard-pressed families. If the levy is removed, GloHealth will immediately be positioned to reduce the cost of its health insurance products.

Third, we urge the committee to ensure a stated objective of the Health Insurance (Amendment) Bill 2012 is to ensure affordability across society and avoid discouraging younger and healthier consumers from entering the market.

Nobody is under any illusion about the challenges facing the Government in framing the next budget and the added burden its provisions will place on all members of society. The health insurance levy is Exchequer neutral in that it is not a revenue raising measure. However, the spiralling cost of health insurance has a significant impact on 2.1 million people in this country. We are very concerned at the failure today of the representatives of the Health Insurance Authority to undertake to address the overall affordability issue and the contraction evident in the market. At our meeting with representatives of the Department of Health last week we asked for an assurance that the health insurance levy would not be increased at the end of the year. We were disappointed that such an assurance was not forthcoming. The committee can play a very positive role on behalf of consumers by urging the Government not to increase the levy further for 2013 and to address the key issue of affordability.

I thank the Chairman and members for their time.