Health insurers have warned that subscribers will face even higher increases in premiums from January on foot of a Government announcement on private patient charges late on Friday which they maintain could add close to €100 million to their costs.
This comes on top of the reduction of tax relief on health insurance announced in the budget in October and the Government’s recent increase in stamp duty which insurers maintain could see the net cost of subscriptions rise by 15 per cent next year.
In a letter sent on Friday evening to the health insurance industry, the Department of Health said Minister for Health James Reilly had decided to stick with proposed new rates for private patients treated in public hospital from the beginning of next year.
These rates – which would see insurers charged €1,000 a night for subscribers accommodated in a single room in a public teaching hospital – have proven to be hugely controversial in the sector.
The Minister had argued last summer that the Government’s intention was that the new rates would generate only €30 million in additional revenue next year. However insurers have disputed this projection. They maintain that a report on the proposed charges, which they commissioned from consultants Deloitte, forecast that the measures would cost them €115.5 million.
Some insurers have argued that the new rates could realise as much as €130 million for the Government.
In the letter, the Department of Health said it had been advised by the regulatory body for the sector, the Health Insurance Authority, that had the new rates been introduced in 2012 they would have generated an additional €82 million-€94 million in revenue.
The department said that in framing the health spending estimates for 2014 it had forecast that private in-patients would use 758,000 bed days in public hospitals next year. It said that, given a fall-off in private patient activity in public hospitals compared with 2012, the proposed measures would generate additional revenue of €39 million.
The Department of Health forecast overall that public hospitals would receive €560 million in respect of private patients treated in their facilities next year.
Earlier this month Dr Reilly said the stamp duty for health insurance products providing “advanced” insurance cover would increase from €350 to €399 for an adult and from €120 to €135 a child.
In the budget, the Government introduced a cap of €1,000 on the level of health insurance premium which attracted tax relief for adults, and €500 for children. Previously, tax relief of 20 per cent was available for the full cost of health insurance policies.
The move saw an immediate rise in the net price paid for health insurance for people subscribing to plans costing more than €1,000.
Subscribers to more expensive health insurance plans were hit hardest, with the net price for top-level plans increased by some 20 per cent.
Last week GloHealth said it was raising the cost of plans by between 5 per cent and 10 per cent by the end of December. Aviva is expected to announce a price rise this week.
