THE GOVERNMENT'S move to protect people over 50 from having to pay a steep increase in their health insurance bills received a conditional welcome from Labour Party health spokeswoman, Jan O'Sullivan, but she said more details were needed before a final judgment could be made.
She said the scheme had to be introduced because of the botched attempt by the Government to introduce a risk equalisation scheme to ensure fair play for all categories of people taking out private health insurance.
"The principle of risk equalisation is a well-established feature of the health insurance market throughout Europe. It is designed to compensate companies like the VHI, which have older and more costly members and thus allow them to compete with companies that have younger members with fewer claims.
"Without some intervention, elderly people would face penal rates for private health insurance and it is vital that they should be protected from this, particularly against the background of the Government's decision to withdraw the automatic entitlement of the over 70s to a medical card," said Ms O'Sullivan.
She added that while the Labour Party supported the principle of the move, many questions could only be answered when the legislation was published.
"Subscribers, other than the elderly, will now face a very hefty increase in the charges they pay and this will be in addition to the various extra changes and tax increases imposed by the Government in the Budget.
"The Labour Party will expect to see watertight provisions in the legislation to ensure that the €160 levy is genuinely used to subsidise the costs of insuring elderly patients and that it is not used to boost the profits of the private health insurance companies or as some sort of hidden subsidy for the Government," she said.
Ms O'Sullivan added that the entire saga reinforced the case for universal health insurance that would end the two-tier nature of the health service and ensure fair and equal treatment.
Fine Gael health spokesman, James Reilly said the new health insurance plan meant that consumers would now be paying for the Minister's botched legislation on risk equalisation.
"Only one thing is certain about the Minister's announcement today: the proposed measures will inflate the cost of private health insurance across the board. Current subscribers who are 50 and younger may well be forced out of the market," he said.
Dr Reilly said the health insurance levy, passed on in full, would cost a family of two adults and three children almost €500 extra a year before whatever substantial increase in premiums the Minister was now going to sanction.
"The tax relief measures are unclear - they are referred to as tax relief in the Minister's statement, but tax credits in the explanatory notes. It is also by no means clear if the tax reliefs aimed at those over 50 will be sufficient either given recent reports that VHI figures compiled for the Department of Health showed the price of a typical plan B premium rising to between €1,435 and €2,625," he said.
"In reality, the Minister has flunked the challenge of redrafting the risk equalisation legislation since the Supreme Court struck down her initial scheme in July and has opted for this measure in the meantime.
"The interim nature of these measures must cause concern. Whenever a new risk equalisation scheme actually materialises, the price hikes associated with today's levy will have already hit consumers without any true financial justification being given for them. In fact private health insurance subscribers will be the victims of just another stealth tax."
Dr Reilly added that with profits of €110 million last year, the VHI had made no coherent case for an increase in premiums.
"Risk equalisation may be gone, but community rating still applies and therefore no selective premium increases based on age can be enforced. Furthermore, any increase must be approved by the Minister under law. People will be asking if they are being conned yet again," he said.
