Health insurance levy could cost sector four times more

Health Minister James Reilly’s new health insurance levy could cost the sector up to four times more than was initially claimed.

Senior officials in VHI, Glo Health, Laya Healthcare, and Aviva Health issued the warnings in separate statements to the Oireachtas health committee — claiming the hike is pushing the sector “to the brink of collapse”.

Under plans announced in last month’s budget, the Department of Health is to impose a fresh health insurance levy on the market next year.

While it was initially stated this would bring in approximately €30m to the exchequer from insurers, the companies have said the rate is more likely to be in the €115m to €130m bracket.

Although it is unclear whether the new levy will be imposed on Jan 1 as planned, insurers said if this happens the move could see already hiked premium prices rise by another 15%.

The policy comes on the back of a previously imposed Government cap on when tax relief can apply to health insurance, which stands at €1,000 for an adult and €500 for a child, and a charge on private patients using public hospital beds detailed this year.

And, as a result, the firms said it is in effect pushing young people — who are needed to keep the sector afloat — out of the insurance market and pushing the industry to the brink of collapse.

“Private patients are paying on the double for something they have a right to have [fast access to care],” said VHI chairman John O’Dwyer.

“It is the same issue for all health insurers. We need to look at options to encourage younger people in the market to stay.”

His comment was mirrored by Laya Healthcare managing director Donal Clancy, who said the health insurance market has “gone into shock” as government policies have “forced young health people out”.

Health insurers repeatedly aim to increase their market base among 18 to 40-year-olds. This is because they are less likely to get sick or need more complex health procedures, compared with older people who are increasingly making up a larger share of the market.

Figures detailed by Aviva Health show 175,000 people under the age of 50 have cancelled or not renewed their insurance in recent months, while 50,000 more people over the age of 50 now have private health coverage.

While the groups said they want to look after the needs of all patients, they claimed this is becoming increasingly impossible to do without an adjustment towards risk equalisation which will see customers charged the same amount regardless of age.

Health insurers have repeatedly hiked the cost of their packages in recent years in an attempt to balance their books.