Billy Kelleher (Cork North Central, Fianna Fail)
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Question 1: To ask the Minister for Health the measures he intends to take to deal with the drop off in the number of persons that have private health insurance; the measures he will take to ensure the increase in the community rating levy will not be passed on to private health insurance customers; and if he will make a statement on the matter. [1629/12]

James Reilly (Dublin North, Fine Gael)
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Ba mhaith liom fáilte a chur roimh gach éinne ar ais anseo inniu. I welcome everybody back after the Christmas break.

I am concerned that private health insurance is becoming harder to afford, especially for older people, as insurers increasingly tailor their insurance plans towards younger, healthier customers. I am strongly committed to protecting community rating, whereby older and sicker customers should pay the same amount for the same cover as younger and healthier people. To protect community rating, we need a system of risk equalisation which ensures that community rating can survive. We have an interim scheme in place since 2009. It is designed to compensate insurers which have older, less healthy customers and therefore higher claims costs, compared to insurers which have younger, less costly customers. The interim scheme is funded by a community rating levy in respect of every health insurance policy written. I extended the interim scheme for a further year in 2012 and will introduce a more detailed risk equalisation scheme under new legislation from next January.

To keep down the cost of health insurance for older people, I increased significantly the age-related income tax credit for insured persons aged 60 years and over, from 1 January 2012. The measures I took are designed to result in no overall increase of premiums in the market and to spread the risk more evenly between the healthy and the less healthy, the old and the young. I welcome the announcements by Aviva and the VHI that they do not envisage passing an increase on to customers' premiums on foot of revised rates of age-related tax credit and community rating levy for 2012.

In December 2011 I agreed with the three commercial health insurers to establish a health insurance consultative forum, to tackle issues of mutual concern. We agreed to work co-operatively in driving down costs related to health insurance and to identify savings that could be achieved by public and private hospitals. I indicated to the insurers that I would be happy to hear proposals from them which would result in lower costs for the health insurance sector. A new review of the VHI's claims costs will be carried out to establish what further savings can be made. The review is to be completed early this year and will contribute significantly to more effective cost control within the private health insurance market. I am determined that these and other measures will have a significant impact in containing the level of any future increases in health insurance premiums.

Billy Kelleher (Cork North Central, Fianna Fail)
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I also wish everybody a happy new year and in respect of the Department of Health, a peaceful new year among the Ministers.

While I welcome the Minister's reply, it does not address the key issue, that the cost of health insurance is inflating rapidly and many families are no longer able to afford to have private cover. During a Dáil debate this time last year the Minister stated he fundamentally opposed an increase in the community rating levy and he was vehement in his criticism of an 11% increase. A few weeks ago we found out he had sanctioned a 40% increase. What is the difference between what he stated in January 2011 and the decision he made recently? What has changed with regard to the issues in the health insurance industry generally that it is now okay to increase the community rating levy by 40% when previously he fundamentally opposed an increase, stating it was an attack on the elderly and every person who was trying to take out private health insurance?

James Reilly (Dublin North, Fine Gael)
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With regard to the comments made on people leaving the health insurance market, there is no doubt families trying to afford to take out insurance are feeling pressure. However, it must be stated the results of surveys which have shown that up to 700,000 people will leave the health insurance markets reflect the results of surveys undertaken in the past which showed similar figures but which never materialised. Sometimes the wording of surveys needs to be examined.

I was critical of the levy on insurance premiums because I did not see it as leading towards what was required - a proper risk equalisation scheme. For a period of years we have had the levy, with promises of things to come, but there has been no delivery. In the short nine months in which we have been in power we have put before the market a risk equalisation scheme. It has been passed by the Cabinet and legislation will enact it into law. People can see what risk equalisation will mean for the market which needs a year's advance notice to address any changes required in premiums and insurance packages offered and we have provided for this. The key point is that this is the final year of the levy. The levy is about fairness to those individuals who when they were young and well supported those who were older. They now have the right to expect the same and we owe them that courtesy. That is what the levy is about.

Billy Kelleher (Cork North Central, Fianna Fail)
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Nobody disputes the fact that there should be intergenerational solidarity and that we should support those more in need of private health insurance as they grow older and become more dependent on the health service. The key point, however, is that more people are giving up private health insurance. The Minister has a proposal with regard to implementation of a universal health insurance policy, but while he is pursuing this agenda, people are leaving the health insurance market. More than 60,000 left the market in 2011. I do not blame all the decisions made by the Minister for this. Many have done so because of the financial difficulties being faced by families. However, the decisions made by the Minister have encouraged some to give up private health insurance. The difficulty is that there is grave uncertainty. Nobody is sure how much private health insurance will cost this year or next year and there is the promise of a universal health insurance system at some stage down the road in nirvana time. Many, however, will be forced to give it up in the meantime and this will place huge pressure on public services which are already overwhelmed.

James Reilly (Dublin North, Fine Gael)
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One of the prime reasons people have to give up private health insurance is that they have lost their jobs and I do not need to remind the Deputy as to the reasons for this. Thankfully, there are now fewer than 450,000 people unemployed; last month there was a drop in the number on the live register for the first time in a number of years. That is the main reason people cannot afford to take out health insurance. I reassure the House that the levy does not increase the cost of insurance in the marketplace, rather it is a transfer of funds from those who are younger and well to those who are older and unwell. The market has become segmented, by which I mean the insurers have sought to create products more attractive to younger people and less attractive to older people and to price them accordingly, the net effect being that it has become more expensive to insure older persons.