The Government has been accused of making a U-turn on health insurance reform that will result in consumers being ripped off.
As the Government's proposed reforms were discussed in the Dáil this morning, Fine Gael health spokesman Dr Liam Twomey criticised the moves, saying private health insurance customers would get "one hell of a raw deal" in a move that was "all about privatising the VHI".
But Minister of State at the Department of Health Tim O'Malley said the Government was taking a "proportionate response to market developments".
Later Minister for Health Mary Harney released a statement in which he she said the "decisions taken by the Government this week are a clear and balanced response to the need for reform in the health insurance market".
The minister added that a number of "extraordinary red herrings" have emerged in this debate since the reforms were made public.
In a bid to clarify the issues, Ms Harney said today that the reforms do not involve "privatisation of health care providers, hospitals or insurance" and that "these changes and what remains to be decided make no case for universal health insurance, which is compulsory health insurance and a new tax on ordinary people".
"Competition is good for consumers," she added, "and is compatible with community rating. A return to a monopoly in health insurance would not be beneficial for consumers."
The reform will see the introduction of regulations that will cut risk-equalisation payments to the VHI by 20 per cent. The Government-owned VHI receives the payments from its rivals in compensation for its older customer base.
Suggested changes to the current system of community rating, where everybody pays the same for the same level of cover regardless of age, mean a 45-year-old entrant to health insurance would pay 45 per cent more than a 30-year-old. A 60-year-old would pay almost double.
In addition, community rating may in future be applied only to basic health insurance packages. The changes would favour those joining a health insurer earlier in life.
The changes were contained in a report by the Barrington group which was published by Ms Harney yesterday.
Dr Twomey told the Dáil: "The only thing that is going to go up here is private health insurance premiums, and you [the Government] haven't the honesty to admit to the people who have private health insurance they're getting one hell of a raw deal from this Government.
"Ye haven't a clue what you're doing. You have U-turned on all this nonsense you have been spouting when Bupa was exiting this market," he said.
"Some of the stuff that drove Bupa out of this market you are now responding to, but at the time you said risk equalisation as it stands is perfect, does not need to be altered and will remain. And now you're basically saying that there is a problem with risk equalisation as it applies in this country.
"You also promised four months ago that you would never change community rating. That was also supposed to be sacrosanct," Dr Twomey added.
Labour health spokeswoman Liz McManus accused the Government of "overwhelming arrogance" for not allowing more time for debate. "We now have a miserly concession of five minutes each which is not in any way acceptable," she told the House.
"I have great concerns that the shift that the Government are now taking in relation to community rating," she added.
"It seems all the more curious because the Government went into court and fought for risk equalisation and won handsomely when it was challenged, and yet they themselves are now dilluting the risk equalistiona provisions in a way that is uncalled for and isn't necessary but is certainly about some kind of payback in relation to what happened when Bupa withdrew from the market here."
Ms Harney met VHI chairman Bernard Collins and chief executive Vincent Sheridan today to discuss her plans.
In a short statement following the meeting, VHI said the meeting aimed to express "real concern" about the decision to dilute the current risk equalisation formula.
"On the issue of the future structure of VHI Healthcare, we agreed to work with the proposed inter-departmental group. VHI Healthcare is a membership based organisation and we will at all times promote what it is in the best interest of our members," the group said.
