Yesterday as we all digested the budget; some areas were proving somewhat indigestible for some of the population. For those holders of Private Medical Insurance and for the 4 insurers (Aviva Health, GloHealth, Laya Healthcare & Vhi Healthcare) who provide their cover, they were all trying to come to terms with one of the measures announced by Minister Noonan during his budget speech.

The Minister for Finance announced that from today, the tax relief of 20% on Private Medical Insurance Premiums would now be capped at a premium of €1,000 per adult and €500 per child and that the measure will “restrict the exposure of the exchequer in relation to premiums paid for ‘gold plated’ medical insurance policies, while not affecting the majority of individuals who avail of more standard levels of medical cover”.

This was a measure that the insurers knew nothing about prior to the announcement and therefore had no systems set up to cope with the change.  Indeed tens of thousands of consumers will have received renewals that will now have to be altered as a result of this broad slashing stroke.  In fact it is rumored that even the Department of Health knew nothing about it, that it came straight from finance!  So if that is the case and there were no leaks as to the intention of the government to do this, how much research was actually done on the likely effects of this measure and who it would affect?

Let’s look at the points the Minister Noonan (Minister for Finance) raised on air to justify the measures taken:

Prime Time 15^th October

Minister

The cost of medical insurance has increased by 80% in the past 3 years.

Our Response

Was he suggesting that health insurers have been largely profiteering on these increases? That this will force them to respond?  Whatever the reason it is wildly incorrect and very misleading.  The average premiums paid in 2009 was €873 and the average premium paid 2012 was €1,048.*  This is an average increase of 20% in the last 3 years.  So the Minister was incorrect by a measure of 400%.  Some plans have increased by 80% but to use the extreme example as justification for one’s actions is grossly misleading.

*Source HIA (Health Insurance Authority)

Minister

This measure will force insurers to renegotiate their pricing.

Response

With who? The Hospitals? The State forbids the insurers to negotiate with Public Hospitals which has led to the cost of a private room in a Public Hospital costing more than a private room in The Blackrock Clinic!  Not only can they not negotiate with Public Hospitals, but they are now going to be charged the cost of a private room in a Public Hospital even if their customer doesn’t enjoy that level of accommodation.   Even if on admission to a public hospital, the member says, “yes, I have private health insurance but I would like to go public and use my universal entitlement under my PRSI”, the Hospital is now going to charge the insurer. Where would you like them to negotiate?

RTE Radio One 16^th October

Minister

The old days of Plans A, B, C & D etc are over.

Response

No they are not. All these plans still exist today in one form or another and are the basis of every other plan in the market. There are still only 5 levels of inpatient cover available mirroring A, B, C, D and E. Most of the market is on a level 2 style plan.

Minister

I checked the Vhi website and there were now 27 plans available! And that they have pitched these measures around a typical family plan.

Response

Is this indicitive of the research done to come to this decision? In fact there are more like 260 plans available across the entire market and Vhi cover only 56% of the 2.05 Million people insured. However if we are taking about Vhi, they actually have 94 plans. So again the Minister is only wrong by a margin of 350% this time.

Minister

You’ll get the relief up to €1,000 for each adult and up to €500 for each child.

Response

Of the 260 plans available minister only 19 of them are not affected by this measure.  Of those 19, 13 only cover public hospitals and only 6 were designed to cover Private hospitals .  However even the ones that do, come with excesses of between €150 and €500 per night.  Over 80% of the population is covered by a Level 2 Plan or Higher.  So much for “not affecting the majority of individuals”.

Minister

More than 55% of the tax payers don’t pay for Private Health insurance and are financing the tax breaks of those who have it and they get no benefit from health insurance. It is an issue of fairness.

Response

Approximately 40% of the working population have private pensions yet 60% of the population finance tax breaks on their pension contribution up to 41%. So do the same rules of fairness not apply here minister? As for the uninsured population not benefiting from Private Health Insurance, Health Insurance premiums largely fund the public health sector, keep the hospitals moving more freely and prevent the buildup of waiting lists for day case procedures.

Minister

There are no Private Hopsitals for children and hence children don’t have to get covered by Private Healthcare. So he hopes insurers respond and gear appropriate plans and put them on the market!!

Response

What does this mean? Do you mean that there are no Private Hopsitals that operate solely for children? That’s correct. However if you mean that Private Hospitals don’t treat children, that is incorrect.  In fact many Private Hospitals provide care for children as standard. Here are a list of just some of the Private Hospitals with specific Paediatric Departments:

Bon Secours Tralee

Bon Secours Limerick

Barringtons Hospital

Beacon Hospital                (further investment expected in paediatric care)

Hermitage Clinic               (further investment expected in paediatric care)

Mater Private

These and other Private Hospitals ensure that many of our children have alternatives to the 2,353 children currently on waiting list for procedures in Public Hospitals across the country.  This, Minister, seems reason enough to me to cover your children for private health insurance at a net premium of only €215, €150 or even for free depending on the insurer.  But according to the Minister these plans are clearly not appropriate or appropriately priced!

The interview finished with Sean O’Rourke forwarding on the calculations of ‘the advisors outside’ who could confirm that the caller (Myles) who rang in about his health insurance, didn’t have to worry about the new measures because the premium he was paying was less than €1,000. Unfortunately the expert advisors didn’t seem to realise that the premium Myles pays is a net premium, not the gross.  Myles’ premium was indeed over €1,000 gross and hence was very much effected by the measures.

All in all, a disgraceful performance from the Minister for Finance in relation to this matter who was clearly beyond his brief and found horribly wanting.

The strange thing is, it would have been more honest for the Minister and Government to simply scrap the tax relief altogether instead of woefully trying to justify the measure that was annouced.  A measure that in my opinion demonstrated gross incompetency.

Patrick Brennan

Irish Health Insurance