A number of health insurance companies have welcomed proposals by the Minister for Health for a freeze on premium increases in return for no increase in some taxes in the sector. However they have warned that Government that its stamp duty, or health levy, was not the only factor influencing cost rises.

The Irish Times reported yesterday that Leo Vardakar would make the proposals as part of a drive to increase the take-up of health insurance, particularly among younger people. He will also suggest a sliding scale of discounts on insurance policies for people between 21 and 25 to incentivise them to take out health insurance. About 280,000 people have dropped out of the private health insurance market since its peak in 2008.

Aviva said it welcomed "any initiative which supports the stabilisation" of the market. "The health levy which has increased by in excess of 80 per cent for most of our customers over the last five years, is one of the factors leading to premium rises."

Laya healthcare, the State’s second-largest health insurer, said it looked forward to hearing the Minister’s proposals on the health levy. However it said the Government’s health insurance levy was only one of a number of policies affecting costs.

GloHealth said it had recently presented Mr Varadkar "with a number of solutions to address the affordability issues facing health insurance customers".

The State-owned VHI, the largest insurer, did not comment on the proposals.