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HEALTH MINISTER LEO Varadkar is planning to tackle price rises in the health insurance sector by offering a Government commitment not to increase some taxes on the industry for up to two years.
Insurance companies would be asked to freeze their prices in return as part of the plan, details of which were revealed this morning in the Irish Times.
The proposal, which is to be discussed by Cabinet in the next few weeks, would see the Government offer a freeze on increases in stamp duty levies paid by the insurers, which go into a ‘risk equalisation’ fund used to compensate companies with a larger number of older, less profitable customers.
The duty was increased by former Health Minister James Reilly last year, and companies passed the increase on to customers when the changes came into effect in March.
Another part of the plan being proposed by Varadkar would see a sliding scale of discounts offered to younger people aged between 21 and 24. There’s been a fall-off in younger people taking out insurance policies in recent years.
The community rating system, whereby customers who wait until they’re 35 to take out insurance will face a financial penalty, is also due to come into effect next year.
[Health Insurance Authority]
So, what have people been saying about the recently-installed Minister for Health’s big plan?
Dermot Goode, health insurance expert with totalhealthcover.ie, said he would “love to see it happen on one level”…
“From a consumer perspective it would be fantastic if he could lock the companies in for two years.”
But I don’t see how he can do it. They have to cover their claims.
Goode said factors like medical inflation are putting huge pressure on companies’ costs, noting that a raft of new, expensive drugs have come onto the market recently — including for instance, skin cancer treatments that cost between €50,000 and €100,000.
If their claims costs continue to increase they’ll have no option but to pass on price increases.
Regarding the other strand of Varadkar’s plan, Goode said he welcomed the Minister’s plans to incentivise younger people to take out insurance, though he notes:
The real cohort we need to target is 25- to 34-year-olds. They’re the ones that are leaving in their droves and they’re the ones who don’t claim.
Goode believes the Minister should increase the age-group threshold to 29, in addition to bringing-in other incentives for younger policy holders, like reducing the health insurance levy of €399 per adult, and reinstating a tax-break abolished in the last Budget.
And he said that if the Minister was intent on taking action, he needs to do so before the end of the year, when most policy renewals take place.
UCC Health Economist Dr Brian Turner described Varadkar’s plans to tackle stamp duty rates paid by insurers as a “good start”.
While regarding efforts to incentivise plans for younger people, he said a sliding scale would help tackle the problem.
“Student premiums are at most 50 per cent of the adult premiums — so you’re talking about at least a doubling of premiums if someone comes out of a student category or if someone comes out of a child category and goes into the adult category,” Turner told Newstalk’s Pat Kenny Show.
“That’s a big jump for people so I think having a sliding scale would certainly help.”
The idea with that is that it would attract in younger consumers who don’t really have high claims costs — they’re the ones the insurers want to attract in or want to retain as the case may be. They’re the ones of course who are subsidising the older consumers who have higher claims costs.
Denis Naughten, the former Fine Gael and now Reform Alliance TD, says it appears the Government are “late converters” on the issue, and are finally waking up to flaws in policy.
Denis Naughten / TwitterAt last Min Varadkar sees error in Gov flawed policy on health insurance. Older people signing up for 1st time as families leave...
— Denis Naughten (@DenisNaughten) September 8, 2014
“There’s been a crisis within the health insurance market since the recession came in,” said Naughten, who has been an active campaigner on health issues.
A lot of families have either left the health insurance system altogether or have taken their kids out because they can’t afford it.
Naughten agrees that the Government needs to incentivise policies for younger people.
“I think they’re going to have get more creative in how they offer incentives too, to get people active: for example, if you have a policy with the VHI that you could get discount in relation to the local gym or swimming pool.
“The current system of just treating people when they are sick has to change,” Naughten added.
TheJournal.ie has also asked the health spokespersons from Fianna Fáil and Sinn Féin for reaction. We’ll update the article once we hear from them.
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They government steal a third of health insurance feeding levies and taxes. They want the supplier to freeze their charges? Why not just cut the taxes?
Michael cut taxes are you out of your mind!! what would the parasites live on ?? If we all didn’t pay our taxes that would mean the parasites would have no income , the government would fall apart and they would have to go out and get jobs and actually earn a living with out sucking the people dry , we couldnt have that …could we ??
Lets be honest here. The whole health system is ruined. Everything about it is in tatters. Prices for insurance and medicines are sky High. My medication used to cost €71. The generics are 30 per month. I actually feel better on the generics. This health system needs someone with balls. Someone to tell big pharma no, tell the unions to bugger off and scrap the thing and restart
So someone who wants to commit political suicide then? I agree with you but it will never happen.
And its by that statement that nothing will ever change. The things needed to fix everything that is wrong with the system would require whole parties to commit political suicide, and probably then next few succession of governments to do the same in order to fulfil what is required. They system is not just broke, its unworkable, highly expensive to run and not fit for purpose. It needs completely replacing
How could you feel better on a generic version of the original innovative compound.? It is the same med.
Similar to the Placebo effect, except because you’re paying less for the same medicine you think it makes you feel better.
@Joe
The Placebo effect.
Why not improve the national Public Health Service Leo it’s your job. Let the private companies deal with private health
I agree. Why can’t they just try to improve the public service to the point where it works fairly well. This constent tinkering around dosent give people confidence in the ability of the minister to actually have it fixed.
Because they don’t want the Public Health Service working well, it it worked well no one would need private insurance.
Or if it worked well private health would have some real competition and would have to reduce prices.
Before he took over the health ministry he couldn’t keep his gob closed, he’s been very quiet in recent times though. I’d say he has a 24 hour headache
“There’s been a fall-off in younger people taking out insurance policies in recent years.”
There has been a fall of in everything in recent years.. It’s called a recession, followed by austerity. What did they expect to happen. maybe people should keep their health insurance and not pay their electric bill
What happened to the state looking after its voters , why do people require private insurance ??
Can the state not support the very people who put them in power , has the state forgotten , there are only 4.5 to 5 million in this country any they cant even look after their health need without involving private companies , were is all the tax income going too ??
Eh, here’s a suggestion Leo: lower the levies. Oh wait, its ok for the government to rob people blind.
No matter what tinkering Varadkar does, it’s a terrible idea.
Private health insurers should be replaced with not for profit ones or, ideally, a fully state owned one.
Yes insurers should not run at a profit – they should run at a loss and the larger the loss the better.
Banga Ncube, You saw the comment, but you didn’t read it, Griska means to get rid of private health insurance and replace it by non for profit state insurance, which means by de facto it would be loss making or even at best.
I think you totally missed the point of his post Banga
Simon, you could be right – silly me.
What a farce of a health system we have in Ireland. Government interference to try stop individuals giving up their private health insurance? The government might as well just come out and publicly say it that the public system cannot cope.
I can see another tax coming, a 10% income tax “health Insurance” scheme as the existing budget is gradually handed over to the Troika in reparations
Freeze prices for two years. Timing of the next general election has got nothing to do with it of course.
Very good Twing. The government should do absolutely nothing about anything until after the next general election. Your method of thinking leads me to believe that you are a member of the SF intellectual elite.
This government are just appeasing big industry and the financial sector. They don’t care ! They have a unique chance to build a reasonable health care system based upon a working model that serves the people that need it.
We have examples of healthcare systems that work and cost a fraction of our useless top heavy corrupt, inefficient so called HSE.
The Health system is like other state ran operations, it simply cannot get enough money ! why because of the of the amount of people they employ who do very little , the one”s on the coalface are the only one’s doing the work
. like all state run operation too many political friends and connections on the payroll and the big say the unions have in all of this, I would like to know the percentages of private verses public who have private health insurance?
The fact the Leo is talking something that is a luxury for most people in this country proves where his focus is. What about people with no insurance? People that can’t afford it? Where’s Leo’s plan for them?
Health insurance is a Red Herring, we need a health service first.
25-34 year olds are leaving in their droves and they don’t make claims.
That says it all. You only start making serious money when you’re in your late 40s and 50s which is also when you start getting sick. It’s completely unfair to expect young, healthy and broke people subsidize old and wealthy people.
Can someone please tell me why most GPs only accept cash payments? Maybe that’s a stupid question. ….!
Veradkar will not be the head of government any day soon as he left the Transport job in a worse situation than when he started, he will leave the Health job in a worse state than now. He simply is a politician who loves to storm through whatever he wants to get to the top. Bullies are common in the Dail but this guy leaves a pretty sorry mess behind him. FF did this for years while stuffing their pocket pockets with cash(ask Bertie). This guy is doing the same thing.
Varadkar will be Taoiseach… One day
The next leader in waiting me thinks.
Taken from the Fine Gael 2011 Election Manifesto under the heading “Healthcare for all”. Point 4 is as follows:
“Fine Gael will introduce risk equalization to make the system fairer, tackle the VHI’s dominant market position, and encourage new entrants into the market”.
All I have seen introduced is risk equalization, and the costs were passed onto the insured by the insurance companies, so not really of benefit.
On a side note, I just started re-reading the Fine Gael 2011 Election Manifesto and its something Hans Christian Anderson would be proud of.
Whatever we think Enda our great leader does not think a whole lot of it
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