James Reilly (Dublin North, Fine Gael) | Oireachtas source

I want now to turn to the issue of costs, an issue fundamental to the Government's programme of reform. I do not accept that medical inflation is in some way special or should be allowed to jeopardise affordable health care. I have emphasised to insurers to do everything possible to keep down the cost of health insurance so that it is affordable for as many people as possible. I have consistently raised the issue of costs with health insurers and I am determined to address costs in the sector in the interests of consumers.

Last year, I established the health insurance consultative forum, which comprises representatives of the country's main health insurance companies, the Health Insurance Authority and Department of Health. This forum was established to generate ideas which would help address health insurance costs, always respecting the requirements of competition law and giving a voice to insurers in the development of the new universal health insurance model. I have made clear to the health insurers that I believe that significant savings can still be made, the effect of which can be to minimise the need for increases in premiums. I have requested the VHI to address its costs as a matter of urgency. In particular, I have asked it to focus on auditing the volumes of procedures it pays for and to audit, from a clinical perspective, the appropriateness of procedures carried out before funding them. I have also stressed to the VHI that it should critically examine the actual prices its pay to health professionals and to private hospitals. I have emphasised the steps that I expect to be taken across the private health insurance industry so as to keep costs and resulting premia down.

Just over 2.09 million or 45.8% of the population currently has private health insurance. The number of people insured has fallen by 63,700 or 2.9% in the 12 months to end-2012, which is a continuation of the declining trend since the peak of 2.2 million, or 50.9% of population, at the end of 2008. This reflects the general economic downturn Ireland is currently experiencing. For those who have been insured on the same plan for a number of years, it is important they review their level of cover to ensure that their needs are being met, without being over-insured. Consumers have a legal right to switch between or within insurers to get better value and to reduce their premium costs. The Government would strongly advise consumers to shop around for the health insurance plan that best suits their needs. The Health Insurance Authority, HIA, provides information to consumers and its website, www.hia.ie has a useful plan comparison tool which assists in finding suitable and competitive health insurance plans.

Since coming into office I have made some significant improvements to the measures in place to ensure that private health insurance remains affordable for older and less healthy people. To keep down the cost of health insurance for older people, I increased significantly, with effect from 1 January 2012, the age-related income tax credit for insured persons aged 60 years or older. Without this support, health insurers would have had an even stronger financial incentive to segment the market by offering policies targeted at young people, to the disadvantage of older customers. With effect from end March 2013, the risk equalisation credits will increase substantially over 2012 levels for higher risk groups, particularly men aged 70 and over. For example, the risk equalisation credit for a 75 year old male with advanced cover has increased by €400 or 20% and for an 85 year old male has increased even more, by €675 or 25%. The Health Insurance Authority has confirmed, based on market average claim costs for prescribed benefits, that the 2013 scheme compensates for 75% of the higher claims costs for those aged in their 70s and compensates for 83% of the higher claims costs for those aged in their 80s.

An additional consideration regarding the cost of health care delivery concerns the charging for public bed occupancy. Under the current legal framework, private inpatients who occupy public beds in public hospitals are not levied the daily maintenance charge which in most public hospitals ranges from €586 to €1,046. The Comptroller and Auditor General reported in 2010 that 45% of inpatients treated privately by consultants were not charged maintenance costs because they were not occupying designated private beds in public hospitals. I have previously announced my intention to bring forward legislation to address this.

As part of Budget 2013, I announced further details on legislation to provide for the charging of all private patients in public hospitals. Primary legislation will be introduced during 2013 to provide for charging of private inpatients in public hospitals, where they are not in a designated private bed. On that basis, budget 2013 provides for additional patient income of €60 million in 2013. This measure is designed to recoup some of the cost of treating private patients in public hospitals. The current system, whereby private patients are charged only €75 per day when they occupy a public bed, represents an unsustainable subsidy to health insurers.

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