Jimmy Deenihan (Kerry North, Fine Gael)
Link to this: Individually | In context

Question 72: To ask the Minister for Health and Children if all moneys collected from the new levy on private health insurance will be ring-fenced for health insurance or if some of this will go to the Exchequer; and if she will make a statement on the matter. [45617/08]

Catherine Byrne (Dublin South Central, Fine Gael)
Link to this: Individually | In context

Question 77: To ask the Minister for Health and Children her views on the impact the new private health insurance levy has had on health insurance premiums; if the recently announced price increases will force many young people and families out of the market due to the fact that health insurance has become unaffordable; and if she will make a statement on the matter. [45594/08]

Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 80: To ask the Minister for Health and Children if she will consult with all health insurance providers in advance of introducing legislation to impose a levy on their clients; and if she will make a statement on the matter. [45489/08]

Mary Harney (Dublin Mid West, Progressive Democrats)
Link to this: Individually | In context

I propose to take Questions Nos. 72, 77 and 80 together.

In designing the package of measures announced on 19 November the Government considered several options and consulted widely. I consulted with the Health Insurance Authority, which has a statutory duty to provide me with advice on the private health insurance industry. In addition, either I or my officials met with each of the three existing insurers in the market before these measures were announced. Given that there is no consensus in the industry on how the differential cost profiles of the customers of the companies can be reconciled to underpin community rating, the Government ultimately had to take the decision on what needed to be done to protect the interests of older people and to ensure they could continue to afford good quality health insurance cover. Meetings have been held with the three major insurers in recent weeks. There will be continuing contact with the companies on administrative arrangements for the implementation of the measures.

In themselves, the measures should not lead to an overall increase in the €1.5 billion in private health insurance premiums paid by all consumers because the new levy on health insurance companies will yield approximately the same amount as the enhanced tax relief for those aged over 50. However, I emphasised that it would be a commercial decision for individual health insurance companies as to how they chose to reflect the overall impact of the measures in setting their premiums. I wish to make it clear that the levy is not being imposed on the individual policy holder but on the companies. It is a commercial decision for each company whether they pass on any or all of the levy to their customers.

Since I last answered questions on this matter, Quinn Healthcare and the VHI announced price increases for customers taking out or renewing policies from 1 January 2009. Quinn Healthcare is increasing prices by an average of 16%. The VHI increases average 23%. Hibernian Healthcare has not announced any increase to date. It is a matter for the individual companies to explain and justify the levels of the increases they are introducing. There are several underlying cost pressures in private health insurance, including medical inflation, the ageing of the insured population, increased numbers of procedures, and greater economic pricing of public hospital services to insurers.

I hope that young people and families will not leave the market. Health insurance cover in Ireland represents good value for all age groups. The Government will bring forward the lifetime community rating regulations for enactment in early 2009. These will provide a powerful incentive for people to take out insurance cover earlier in life and to retain it. Anyone inclined to cancel their insurance now should consider carefully that they may have to pay a higher premium in order to re-enter the market at a later date.

While the amount raised in the levy on companies is intended to equal the cost of the age-related tax reliefs, the moneys collected from the levy will not be ring-fenced because the two measures are being introduced by amendments to two different pieces of legislation. It is a long-standing convention in our tax code that we do not have hypothecated taxes which are raised and ring-fenced for specific purposes. The moneys raised from the levy will accrue to general Exchequer funds and, likewise, the cost of the new age-related tax reliefs will be met from general Exchequer funds. In designing these measures, the Minister for Finance and I made it clear that the combined effect of these measures on the Exchequer, should, as far as is practicable, be neutral. I expect that the amending legislation will be published in the new year.

James Reilly (Dublin North, Fine Gael)
Link to this: Individually | In context

The Minister makes the assumption that this measure will be budget neutral but many have calculated that as much as €15 million will accrue to the Exchequer as a consequence of this levy. In that circumstance, and in a year when we cannot vaccinate our young women against cervical cancer at a cost of €10 million, I hoped that this money, at least, might have been ring-fenced for health services rather than have it go back into the Exchequer. Can the Minister tell the House why it is not possible to ring-fence this money? If the money becomes available why can the Minister not give a commitment to the House that it will be used to bring in the cervical vaccination programme?

Mary Harney (Dublin Mid West, Progressive Democrats)
Link to this: Individually | In context

The intention in this proposal is not to raise revenue but, by way of a levy, to supplement the higher cost of insuring older people through an enhanced tax relief. The matter of ring-fencing any moneys would be a matter for the Minister for Finance. As anybody who has been in Government will know, this policy has never been pursued by any Minister for Finance. A proportion from the money raised from the consumption of tobacco goes to the health service but that is an exception.

I have no control over the moneys that go to Revenue. The health service gets its funding from the Minister for Finance, through the Department and onwards to the Health Service Executive or other funded organisations. Deputy Reilly suggests that, because young people exit the insurance market, this policy was pursued on the basis of advice from the Health Insurance Authority and from our actuarial advisors. The Department of Finance and my own officials were heavily involved. We estimate that the proposed levy will be equal to the amount of money that will be given by way of enhanced tax relief. The total sum is within the pool of those insured. In other words, what is raised by the levy goes back in tax relief. That is the intention. If it were the case that any surplus were to arise, clearly that would be dealt with in a different context.

Jan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

If it is intended that this measure be budget neutral then it would make sense to ring-fence it. I do not understand why this could not be done.

Have the insurers, VHI and Quinn Healthcare, told the Minister why they increased their premia to such an extent? Is the Minister concerned that more people will now use the public service because of the increases? The measure combines with job losses that have already taken place and others likely to happen next year. Are there any contingency plans for that? People cannot afford health insurance any longer.

The Minister said that there would be something in the new legislation by way of an incentive for younger people to take out insurance. Will she elaborate on that point?

Mary Harney (Dublin Mid West, Progressive Democrats)
Link to this: Individually | In context

A number of groups that looked at the private health insurance market in Ireland, including all the companies in the market, suggested to me that there should be an incentive for people to begin their insurance when they are young in order to keep insurance affordable for older people. Relatively few people under the age of 35 use insurance. At a committee meeting recently I mentioned that I am aware of a company that has over 2,000 insured employees. I was told there was not a single claim last year because these are all very young people.

We are going to introduce what is termed "lifetime community rating" and we will do so by way of regulations that are currently being drafted. We do not require separate legislation for that. Essentially, the younger one joins, the cheaper the policy will be. There will be a cost disincentive the older one is joining the health insurance market. That is fair and everybody has recommended it.

With regard to job losses, there is no doubt the increase in health insurance in Ireland between 1996 and 2008 of approximately 14% has been accounted for, in the main, by our increased prosperity and more people in the work force. Some have their health insurance paid as part of their employment contract. There is no doubt about that and there has been a considerable increase in numbers insured, particularly in the Deputy's area of the mid-west. I understand that region has the highest rate of young people insured in the country. That was the case a year or so ago.

James Reilly (Dublin North, Fine Gael)
Link to this: Individually | In context

It will not be the case next year.

Mary Harney (Dublin Mid West, Progressive Democrats)
Link to this: Individually | In context

I hope it will be. Clearly, if there is a decline in our economic circumstances this may will impact on the situation.

With regard to the reasons why the insurance was increased, Quinn Healthcare said that half the increase was due to the levy. I will be honest about that. The company said as much in its public statement. We have in the budget again hugely increased the cost of private beds in public hospitals because I do not believe, nor do I think it sustainable, that public hospitals funded 100% by the taxpayers should offer preferential access to those who have private health insurance. We are trying each year to increase this cost substantially until we get to a situation where the economic cost is charged to the insurers for those private beds and the taxpayers and the public hospitals do not suffer the expense of staffing of those beds.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
Link to this: Individually | In context

Will the Minster indicate if either her Department or the HSE are currently monitoring the effect of growing unemployment on health funding? I have no doubt she would be in a position to confirm there is an increase in the number of people applying for a medical card. Will she also confirm there is a decrease in the number of people taking out private health insurance? Is she aware if a pattern is already presenting where people are allowing private health insurance they have held for a period of time, perhaps years in some cases, to lapse? Is this information available to the Minister? Does she accept, as this Deputy does, that growing unemployment and the increased cost of private health insurance will have a significant impact as both escalate in their respective ways?

In light of this, does the Minister accept that the appropriate response with regard to a growing dependency on the public health system is for all public moneys to be invested in the public health delivery system itself and not, as is the case currently, in having public moneys diverted to the private, for-profit health providers? Does she accept that her signing off on the HSE service plan for 2009 represents a failure to grasp this very simple message and that, instead of squandering public moneys, we should be guaranteeing the continuation of the best quality public service system that this State and our people can afford?

Mary Harney (Dublin Mid West, Progressive Democrats)
Link to this: Individually | In context

With regard to private health insurance, the VHI was established 51 years ago, when I was not around, because it was felt there were people who would make a contribution towards the cost of their own health care. It is a policy I support. Regardless of whether we had a universal system of health insurance, and no such system has been introduced since the Second World War in any European country, there will always be people who will buy more — I have no doubt about that.

We must be pragmatic. We have a mixed system. When I am sometimes asked to explain it to ministerial colleagues in Europe, they are often confused about how one can have private health insurance which gives one service in a public hospital. It is rather confusing but it is a different system. We have to be pragmatic in the way in which we use taxpayers' money to procure treatments.

The purpose of the National Treatment Purchase Fund, which now has a budget of just over €100 million, is to use the spare capacity in the private sector to buy treatments for patients. I accept it is restricted to those treatments that are procedure-based, although they have done some fantastic work in regard to some outpatient appointments. We must continue to use whatever mechanisms and innovation we can to access treatment for patients. In my experience, the patients do not care how it is funded. What they care about is the quality of the treatment.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
Link to this: Individually | In context

We do care.

Dan Neville (Limerick West, Fine Gael)
Link to this: Individually | In context

The Minister committed herself to ring-fencing funds for the psychiatric service in regard to the sale of lands owned by the HSE. Is she not being inconsistent in stating she does not have the authority to do so in this respect?

Mary Harney (Dublin Mid West, Progressive Democrats)
Link to this: Individually | In context

As the Deputy is aware, I am not the Minister for Finance and I do not have any authority over the Revenue Commissioners.

Dan Neville (Limerick West, Fine Gael)
Link to this: Individually | In context

The Minister committed herself.

Mary Harney (Dublin Mid West, Progressive Democrats)
Link to this: Individually | In context

I have responsibility for health and, clearly, in the context of health budgets, we can give directions to the HSE. I do not have such authority with regard to the Revenue Commissioners, except to note that the intention is that the subsidy will go to enhance the tax benefit for older people. This is not introduced as a revenue raising measure but simply to make and keep health insurance affordable for those over 50, particularly those over 70 and 80.