A GOVERNMENT plan to keep down the cost of health insurance for older people could lead to significant increases for those in younger age groups.
The plan contains a new levy for subscribers which, if passed on in full, would see a family of two adults and two children paying over €400 more for cover.
For those on some of the more popular plans, this would represent an increase of about 25 per cent.
The levy is to finance the provision of €300 million in additional tax relief for older subscribers, which is aimed at keeping health insurance affordable for this group of people.
The Government feared that following a Supreme Court decision to strike down a risk equalisation scheme, older people would have to pay substantially more for their cover.
The Cabinet was told by the departments of health and finance that if nothing was done, the bill for an 80-year-old subscriber would rise from €600 to €2,400.
Under the Government plan the additional tax relief will offset the higher gross cost charged to older people, so that in net terms they will pay the same as younger subscribers.
But health insurance companies will have to pay €160 for each adult on their books and €53 for each child.
Minister for Health Mary Harney said yesterday that she hoped the cost of this levy would not be passed on to consumers. "We believe that there is a lot of scope for the companies to subsume some of this, if not all of it," she said.
The plan was welcomed by the country's largest health insurer, VHI, as a means of bringing stability to the market while also helping to ensure that health insurance remained accessible to as many people as possible.
However, Quinn Healthcare said it was concerned about the implications of the Government move - particularly for those on lower-price plans. "Quinn Healthcare will do everything possible to minimise price increases, but at this stage increases are inevitable because of this announcement by the Government," it said.
The company claimed the plan merely reinforced the dominant position of VHI. It is taking legal advice on the measure.
Hibernian Health said that the proposals were "blunt in nature and short-term in outlook" and said that they were aimed at propping up the finances of the VHI.
VHI said that while its prices would rise next year, this would be due to increasing demand and medical costs rather than the impact of the levy. Hibernian Health said that it had no plans to increase prices.
Government sources described the levy and tax relief proposals as "interim measures" to last for three years pending the implementation of a new risk equalisation framework.
Separately, the Government said that it is also to introduce measures to penalise those who take out health insurance cover later in life.
There was a mixed reaction to the move from the Opposition parties. Labour welcomed the principle, while Fine Gael attacked the plan.
"Without some intervention elderly people would face penal rates for private health insurance, and it is vital that they should be protected from this - particularly against the background of the Government's decision to withdraw the automatic entitlement of the over-70s to a medical card," said Labour Party health spokeswoman Jan O'Sullivan.
She added that while the Labour Party supported the principle of what was being done, there were many questions that would only be answered when the detailed legislation was published.
However, Fine Gael health spokesman Dr James Reilly said the new health insurance plan meant that consumers would now be paying for the Minister's botched legislation on risk equalisation. "Only one thing is certain about the Minister's announcement today: the proposed measures will inflate the cost of private health insurance across the board. Current subscribers who are 50 and younger may well be forced out of the market," he said.