Lack of joined up Government thinking to penalise basic health insurance policy holders

Minister must amend flaw in legislation

Over €15m additional penalty on 330,000 consumers who can least afford it

330,000 health insurance policy holders will pay over €15m extra this year, despite assurances from the Government that those with lower levels of cover will be protected from its increased health levy according to Jim Dowdall, Chief Executive of GloHealth.

“There is a serious disconnect between what the Minister for Health told the Oireachtas and what is happening on the ground and the people who will suffer most are those with lower levels of health insurance cover. Many of these consumers are struggling to retain their cover as a result of massive increases in recent years and they should not be asked to subsidise those on higher level health insurance policies. I have asked the Minister to amend the flaw in the legislation which created this situation.”

All health insurance policy holders currently pay a Government levy of €285 (adults) or €95 (child) as part of the Government’s Risk Equalisation Scheme.   In introducing new legislation in this area late in 2012, the Minister for Health said that from March 2013, a new two tier levy system would apply.  This system would result in “advanced” policy holders paying a significantly higher levy (up by €65 for adults and €25 for children to a total levy of €940 for a family of two adults and two children).  Those with non-advanced/basic policies would pay a smaller increase (up by €5 for children and adults to a total of €780 for a family of two adults and two children).

In the Minister’s own words to the Oireachtas: “This is to ensure people who are taking out the basic plan A are not subsidising to an unfair extent as a percentage of their package people who are in a much more expensive product plan”.  The Department of Health has estimated that 16% of policy holders (approx. 330,000 people) hold this lower level of coverage which the Minister promised to protect.

Jim Dowdall explained “In a serious development last week, the Health Insurance Authority ruled that all current policies will attract the “advanced” or higher levy rate in March.  This decision, based on the legislation passed at the end of 2012 means that the 330,000 holders of basic policies will face an increase of €65 per adult and €25 per child, in spite of the assurances given by the Minister to protect this category from the worst impact of the health levy increase.

GloHealth has consistently argued that the current health insurance levy is a failed policy which has driven a vicious circle of rising premiums, leading to over 188,000 people leaving the market, which then results in more premium increases for those remaining.  Despite promising to insulate those on low levels of cover from more increases in this stealth tax, these policy holders are going to be hit with a proportionately massive increase in their costs. Because of this decision alone, an individual with an existing basic policy costing €520 will see an increase in premium of approximately 10%. After March, the Government levy will constitute over 55% of their premium cost.  It is a potentially crushing blow to those who want to retain their health insurance.”

I have written to the Minister for Health urging him to examine the relevant section of the Act upon which the HIA has based its decision.  If the Minister is committed to the intentions which he expressed in the Oireachtas about protecting those on basic policies, he must have the Act amended immediately. 

If this issue is not resolved, the consequences will be that even more hard pressed families will be forced to give up their health cover. To provide policies which qualify as non-advanced or basic, health insurers will have to reduce benefits significantly including the option of recovering the full of cost of scans and other day procedures in private hospitals, a service which is widely used and valued” Jim Dowdall concluded.

About GloHealth

GloHealth launched in July last year and is Ireland’s newest entrant to the private health insurance market. GloHealth offers Irish consumers better value, by saving customers money and by providing extra benefits that customers can tailor to their needs.