Private hospital users to pay higher health insurance

HEALTH INSURANCE subscribers will have to pay more for procedures in private hospitals and semi-private rooms in public hospitals under legislation to be published today.

The legislation will replace the current temporary levy on every health insurance policy with a permanent one with two rates, one for public care and one for private care.

The current single levy of €285 for every adult is likely to be replaced by a higher rate for private care and a lower one for public care.

Similarly, the €95 rate applying to children will be split into two rates for public and private plans.

The Health Insurance (Amendment) Bill, which will come in from January, provides for a strengthened risk-equalisation scheme to replace the current interim scheme.

Risk equalisation involves financial transfers between different insurers to take account of their differing costs arising from the age or health of their customers.

It operates to protect the system of community rating, whereby older and sicker people can buy health insurance for the same price as younger and healthier customers.

Most of the levy goes to the VHI, which has a higher proportion of older customers. These older customers make more claims compared with those of the other health providers Aviva, Laya and Glo Health.

The actual levy to be applied next year will not be announced before the budget.

The Department of Health declined to provide details of the legislation yesterday in advance of its publication, but it has already told health insurers about its plans to introduce two rates each for adults and children.

Last January, in a letter seen by The Irish Times, it wrote to insurers to say that the new scheme would be operated by the Health Insurance Authority, using funds collected by the Revenue Commissioners.

Up to now the risk-equalisation payments have been disbursed by Revenue.

Insurers have also been told that a 90-day notice period will apply for new insurance products and changes to existing products.

More than 2.1 million people have health insurance but the numbers have been shrinking because of the economic downturn.

Separately, the Department of Health announced yesterday that insurers were to make a €125 million advance payment to the HSE to help offset the cost overruns in the health service.

The once-off payment is for private patients already treated in public hospitals but whose claims have not been submitted to insurers.

The announcement was made by the department as its officials met officials from the bailout troika this morning for talks about the €370 million overspend in the health service.

Minister for Health James Reilly welcomed the agreement between his department and the insurers on an “accelerated payment” this year.

He said it would improve cash flow between now and the end of the year. It would also provide much-needed funds for hospitals over this period.