The Government has announced significant changes to two measures announced in last week's budget.
Taoiseach Brian Cowen announced increased thresholds for medical cards for the over-70s this morning and later said the 1 per cent income levy proposed in last week's budget will not apply to those on the minimum wage.
A means test for new applicants for the medical card will now be introduced from January 1st, 2009 and those who are over the new threshold and already have a card will have to notify the HSE.
It is unclear what penalties, if any, will apply if these people do not give this notification of their means but Minister for Health Mary Harney said "normal control measures" would be used by the HSE.
The Government has come under increasing pressure over the medical card proposal and over the 1 per cent income levy proposed for all workers.
Speaking in the Dáil this afternoon, Mr Cowen said the 1 per cent income levy will now not apply to those who earn the national minimum wage or less.
The removal of those on the annual minimum wage of €17,500, about one-third of the workforce, is expected to cost some €50 million, which will have to be found from elsewhere.
The announcement followed a Cabinet meeting earlier today and a meeting with the Irish Congress of Trade Unions on Friday.
The Fine Gael deputy leader and Finance spokesman, Richard Bruton, maintained tonight that Brian Lenihan’s Budget was now in tatters, with the Government being forced “into yet another humiliating U-turn” on the 1 per cent income levy.
In an effort to put even more pressure on the Government the Labour Party leader, Eamon Gilmore, announced that his party would table a Dáil motion next week condemning the Budget education cuts and calling on the Government to reverse its decision to increase class sizes.
The new income threshold for those over 70 who are seeking a medical card will be €700 per week, €36,500 per annum, for a single person and €1,400, or €73,000 per year for a couple. The new limit represents an increase from just over €200 a week for a single person and the Government believes it will allow 95 per cent of those who already have a card will keep it.
The Taoiseach said that those who were above the income threshold and were experiencing difficulty with medical payments could apply to the discretionary medical card scheme.
The Government said it has consulted the Irish Medical Organisation (IMO), and that the IMO has identified "the potential for significant savings" in drug costs, without compromising on patient care.
The Government will now undergo a "process of intense engagement" with the IMO, under the chairmanship of Dr. Michael Barry, with an initial report from Dr Barry to be prepared by December 1st.
The Taoiseach said Eddie Sullivan, former secretary of public service management and development at the Department of Finance, would undertake a process to produce a recommendation for a new capitation rate for consideration by the Government. He would take submissions by next Friday next from the IMO, HSE, and any other interested parties, Mr Cowen added.
The Government will then decide next week on a new capitation rate to be paid to doctors in respect of patients aged 70 and over, he said.
Mr Cowen made the announcement at a press conference this morning accompanied by Ms Harney and Minister for the Environment John Gormley.
“I regret the fact that this caused the anxiety and the stress that it did," he told reporters at the hastily arranged briefing.
Speaking at the same press conference, the Minister for Health said the Government's medical card measures in the October 14th Budget were aimed at helping 95 per cent of those aged over 70 through giving some the full medical card on means basis, some the doctor-only card, and some a cash payment. "Clearly that did not win popular support among those over 70 and did lead to a lot of confusion," Ms Harney said.
She added that the budgetary context of the measures meant that dialogue could not be entered into before now for legal and industrial relations reasons.
"In the context of the health budget, we have to prioritise spending on services . . . the Budget was framed in that context, and it was in that context that the decision [on medical cards] was made," Ms Harney said.
Mr Gormley added: "This has been an extremely difficult issue for the Green Party . . . I would like to express my regret for the very real anxiety that was caused to older people by this episode.
"I think the solution that we have offered here today is one that is reasonable and is one with which the vast majority of people will be satisfied."
The debate on the Fine Gael motion calling for the over-70s medical card scheme started this evening, with a vote expected tomorrow.
The Government's Dáil majority was cut from 12 to eight last night with the defection of Independent TD, Finian McGrath who joined Wicklow TD Joe Behan, who resigned from Fianna Fáil last week, on the Opposition side of the House.
Speaking in the immediate aftermath of today's press conference, Mr McGrath described it as "a step in the right direction" but said the Government "should have backed off on the whole thing".
Elsewhere, Age Action Ireland this morning hosted a public meeting at the Alexandra Hotel in Dublin to give older people a chance to explain to politicians how the abolition of the automatic entitlement affects them.
Green Party councillors are expected to hold talks tomorrow on the issue.