Barry Cowen (Laois-Offaly, Fianna Fail)
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Question 37: To ask the Minister for Health the action he will take to tackle the increase in VHI premiums; and if he will make a statement on the matter. [8360/12]

Liam Twomey (Wexford, Fine Gael)
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Question 61: To ask the Minister for Health the steps he will take or consider to control the cost of private health insurance here; the discussions he is having with the VHI to control the cost of VHI premiums to customers; and if he will make a statement on the matter. [8295/12]

James Reilly (Dublin North, Fine Gael)
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I propose to take Questions Nos. 37 and 61 together. 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 less healthy customers should pay the same amount for the same cover as younger and healthier people.

In order to keep down the cost of health insurance for older people, I was pleased recently to increase significantly the age-related income tax credit, under the Interim Scheme of Risk Equalisation, for insured persons aged 60 years and over, from 1 January 2012. Without this support, health insurers would have had a strong financial incentive to 'segment' the market by offering policies targeted at young people, to the disadvantage of older customers.

I must stress that 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. The increased tax credits for older people are balanced by a corresponding increase in the levy on each insurer in respect of all of its insured customers, so that the system is Exchequer neutral.

In this regard, it is important to note that the levy on policies is not a revenue collecting mechanism for the Exchequer. The Community Rating Levy, under the Interim Scheme, is placed on private health insurance providers for each insured individual, and not on the individuals themselves. It is a matter for the insurance providers as to the extent, if any, they pass the levy on to their clients.

In December 2011 I agreed with the three commercial health insurers to establish a Consultative Forum on Health Insurance, to tackle issues of mutual concern. We agreed to work cooperatively in driving down costs related to health insurance and to identify savings that could be achieved by both 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. The first meeting of the Forum will be Chaired by the Secretary General of my Department and is due to take place next week.

In addition, 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. In the meantime, VHI has been finalising contract negotiations with the private hospitals treating its customers. In addition, VHI's contracts with consultants will be reviewed in mid-2012 and the VHI has informed me that it will be seeking further savings from consultants at that point. 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.

The Government's clear objective is for the health insurance market to remain competitive and strong as we move towards a new system of Universal Health Insurance. It is my intention to ensure that the private health insurance market is reformed to ensure that costs are reduced and that there is a more even balance in the market.