Denis Naughten (Roscommon-South Leitrim, Independent) | Oireachtas source

I rise to speak to amendment No. 16. The Minister on Committee Stage argued that the significant increase we have seen in health insurance has not led to a significant fall in people covered by health insurance. We know that approximately 7.5% of the people insured have now left the system, which is not a small number of people in any respect. Many thousands of people within the health insurance system have downgraded plans, removed children from plans or cut back on other household expenditure to try to hold on to health insurance. The Minister made the argument on Committee Stage when he recited statistics from a survey, and I am sure the officials can provide those to the Minister of State. They made it clear that people were sacrificing in trying to hold on to health insurance, and the cost was a significant contributing factor to people leaving the system. Families are making many sacrifices in trying to hold on, if at all possible, to health insurance.

Over the past three years the health insurance levy has doubled and significant additional pressures are being put on families with regard to health insurance policies. I accept the principle behind the Minister's argument on budget day, although his maths are still wrong in that respect. On budget night I stated that the Minister would have to revisit this because the legislation was to be rushed through and we are doing that with this amendment. I still think the maths are wrong and this will put an unnecessary financial burden on people.

I accept the Minister has indicated that if he does not do something in the next couple of years, we could see €1 billion being put into the health insurance system in tax credits. None of us wants to see that happening. The Minister has set a benchmark on gold-plated health insurance policies that is far too low and because of that, even the most basic policies will see an increase. The Minister made the point on Committee Stage that those on the lower end of the scheme - a typical family - might be looking at an increase of approximately €40, which may well be the case. The difficulty is that the figures from the Department on the overall savings underestimate the total. For example, VHI believes that approximately €120 million will be taken from their customers alone with this proposal, and overall we are probably looking at a saving by the Revenue Commissioners of approximately €170 million. Dividing that among the number of people currently covered by health insurance, the average charge per person covered by health insurance is approximately €80. If a typical young family is paying an extra €40 for a policy, in effect this becomes an age tax, as older people at the higher end of the health insurance system will pay significantly more in their health insurance policies than was the case until now. With this measure, the Government is targeting older people.

I accept there are some policies such as VHI's plans D and E that are gold-plated, and we should not provide tax relief for them. There are many older people who want coverage for hip or knee replacements, and they should have the right to that level of cover. These people are paying premiums well in excess of the average which the Minister spoke about on Committee Stage and they will be paying far more than €40 extra for their policy. That is on top of an increase in the levy and spiralling bed costs. Aviva has already announced that its average price increase will be between 5% and 11% as of 1 January and GloHealth has indicated its increase will be between 5% and 10%. This will force more people from the insurance system, particularly those who are healthier. These are younger and more profitable people within the health insurance system, and they cross-subsidise the older people in the system.

My amendment deletes the provision introduced on budget night.

The proposal the Minister put forward acts as a disincentive to taking out health insurance for families. Bizarrely, the proposal put forward on budget night builds in an incentive to families to come back into the health insurance market or to bring their children back into it. It also encourages younger people to start paying health insurance, which is what we need to do if we are to have a sustainable health insurance system. It does that, bizarrely, because as the legislation currently stands, the policyholder will get €500 of relief for each child on the policy and €1,000 for every adult, irrespective of the cost of the policy. That would encourage more families to take up health insurance and would reduce the burden across the board. It would act as a support for the community-rated system and for older people in the system because it would reduce the overall cost of health insurance for everybody. By encouraging young families with children to take out health insurance, we would be making it cheaper for Granny, which means she can stay in the system and access the coverage for hip replacement or knee replacement. In contrast, the proposal that is currently before us acts as a disincentive for families and makes health insurance far more expensive for Granny, forcing her out of the health insurance system and back onto the public system along with everyone else. The measure is a retrograde step.

I find the situation frustrating. I made a number of proposals on health insurance to the Minister for Health, including the introduction of lifetime community rating, which could encourage younger people to take up health insurance for the first time. Another option would be to introduce a proper calculation for health status that is not based on how many days a person spends in a hospital bed but is more focused on keeping people out of hospital and in the community. Older policyholders could be encouraged to shop around. The Health Insurance Authority has said there are cheaper policies available from other health insurers, but because older people are afraid to switch from their current provider they are not availing of the cheapest policies, which could provide them with enhanced hospital cover. It should be possible for health insurers to directly negotiate with public hospitals, particularly where there is spare capacity within the system, as at present. The Minister does not disagree with any of my suggestions. In fact, he agrees with me. The difficulty is that he has failed to put any of the measures in place over the past 12 months and is kicking the can down the road. We have an opportunity to remove the proposed Government change, which would provide a small incentive for families to take out health insurance for the first time or put their children back on the policy and thereby reduce the overall cost of health insurance for older people within the system. Everyone would benefit. It would act as a community benefit, incentivising people to get involved in the health insurance system. The measure would also support the establishment of universal health insurance, which is the Government's objective. I urge the Minister of State to accept the amendment.

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