James Reilly (Dublin North, Fine Gael)
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Question 70: To ask the Minister for Health and Children her views on the financial 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; when she expects to receive the EU Commission decision on the new levy; and if she will make a statement on the matter. [45860/08]

Mary Harney (Dublin Mid West, Progressive Democrats)
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In reply to a priority question from Deputy Reilly on 25 November, I said that the measures announced by the Government the previous week should not, in themselves, lead to an overall increase in the €1.5 billion in private health insurance premiums paid by all health insurance customers as 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. Since I last answered questions on this matter, Quinn Healthcare and the VHI have announced price increases for customers taking out or renewing policies from 1 January 2009. Quinn Healthcare is increasing prices by an average of 16%, VHI's increases average 23%, while 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. I do not believe the measures announced by the Government have had any significant impact on these decisions. 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 do 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 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 to re-enter the market at a later date. In introducing the measures announced on 19 November, the Government had to choose between allowing older people to be forced out of the market and trying to maintain the key principle of intergenerational solidarity whereby the young support the old.

I expect to have a response early in the new year to our notification of the measures to the Commission.

James Reilly (Dublin North, Fine Gael)
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The Minister claims that if she did not take action, VHI premiums would increase by 60% for older people. This could not happen because we have community rating. It would have to increase by 60% for everybody. She claimed that the levy would not lead to any overall increase in the approximately €1.5 billion in private health insurance premiums paid, but she was wrong because VHI premiums have increased by 23% and Quinn Healthcare increased premiums by 16%, while stating baldly that 50% of that rise was accounted for by the levy. She claimed that certain insurers were tailoring their plans to suit younger people. So did the VHI, which has dominance in the 20, 30, 40 and 50 year old age group sectors — as well as in the 60, 70 and 80 age groups. It dominates the market.

When will the Minister bring the legislation before the House? What will she do about the dominance of the VHI in the marketplace? Will the money raised by the levy be ring-fenced to health insurance, or will it go into the Exchequer — that is a later question, but it may be taken now? Is the Minister not concerned about the estimated 200,000 people who are expected to leave private health insurance on foot of the introduction of the health insurance levy?

Mary Harney (Dublin Mid West, Progressive Democrats)
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The market was segmenting. Citizens could see that some plans were geared to couples in their child bearing years, where maternity benefits were being offered and sports injuries were being included as well as teeth whitening. These products are not of interest to older people, so within a specific plan everybody will have to pay the same rate. However, the manner in which different products were being covered was leading to market segmentation.

This is not about protecting any company, but rather older people. The revenue implications of this are neutral. The money coming in will go back in the form of enhanced tax relief for those aged 50 and over. Obviously, it will be higher for those aged 60 to 70 and higher again for people older than that. The reality is that if one company has 320 times more 80 year olds than another, we know that health insurance costs associated with an 80 year old are twice those for a 40 year old — or a 60 year old will cost twice, on average, what a 30 year old costs. There is no getting away from that.

I do not believe the Government, in the light of the Supreme Court decision, had any alternative but to advance what we have advanced. It requires EU approval and I made it clear there would be no point in bringing the legislation before the House if we have either to change it or cannot proceed with it. As soon as there is a response from the EU, which we expect early in the new year, the intention is to bring the legislation forward if we are in a position to do so.

James Reilly (Dublin North, Fine Gael)
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Many people would reject the Minister's assertion to the effect that she had no option other than to introduce the levy system. The VHI has considerable funds, made a considerable profit of €112 million last year and has raised its premia by 23%. Why was the legislative route offered by the courts not taken, which obviously left the door open for the Minister to bring in new legislation that would introduce a new form of risk equalisation? In the past, I have raised concerns about the level at which risk equalisation was set, given the dominance of the VHI in the market and the fact that with its huge database it no longer has any restriction on it from going into any market. Is this fattening the calf for sale?

Mary Harney (Dublin Mid West, Progressive Democrats)
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The market here was liberalised in the mid 1990s and perhaps other decisions could have been made then, but they were not. At the time, some 37% of the population had health insurance and everybody thought we were at market saturation level. However, some 53% of people now have health insurance.

The VHI is required to be authorised during 2009 and must meet the same requirements as its competitors in terms of the reserves required. It will be a major challenge for the VHI to meet the requirements to allow it be authorised on the same basis. It is important that better consumer information is provided. The VHI, like other health insurers, is now required to send out renewal notices to consumers 30 days in advance of renewal and to notify them that they can switch insurers without penalty. Many members of health insurance companies do not know that. The provision of such information on motor insurance was very powerful in encouraging people to switch insurers. Any measures we can introduce to better inform consumers and encourage them to look at the different options, including the products offered by other companies, will be forthcoming from the start of next year.

With regard to the legislation, we will have it early in the new year when we get the response from the Commission.

James Reilly (Dublin North, Fine Gael)
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Is the VHI for sale?