Legal framework for levy to be in place by Christmas

LEGISLATION TO implement a health insurance levy and related tax relief measures will be passed by the Oireachtas before Christmas, although a decision by the European Commission on its acceptability is unlikely until the new year.

Tánaiste Mary Coughlan dismissed claims by Labour leader Eamon Gilmore that health insurance premiums would increase on January 1st "without statutory authority". Ms Coughlan said Mr Gilmore was "trying to entangle things that have nothing to do with this legislation". She said "there is a methodology by which we can pass legislation and withhold its enactment. One way or another, it will be retrospective to the first day of January 2009. That is the absolute clarity of it."

She told the Dáil the measures announced "will require new health legislation", which will be ready in two weeks. "It is our aim to publish and present this to the Oireachtas for enactment before the end of the current session."

She added "it is also the case that the implementation of these measures requires the approval of the European Commission competition directorate. A formal notification has been made in the normal course the commission will deliver its decision early in the new year." Separate risk-equalisation legislation, necessary following a Supreme Court decision, will take "at least more than two years", the Tánaiste also said.

Minister for Health Mary Harney on Wednesday announced a Government initiative to introduce a levy on health insurance providers to finance the provision of €300 million in tax relief to older subscribers, aimed at keeping health insurance costs down for that category.

Mr Gilmore said: "The proposal is such that the health insurance bill of a couple with three children will increase by approximately €500. Such families will want to know when the legislation is likely to take effect. This should be clarified." He said if the changes are introduced on January 1st, "what the Tánaiste is saying in effect is that this apparently will be done without statutory authority".

The Tánaiste said the Bill will be published before Christmas. "We can enact the legislation but the view is that it would be more appropriate not to commence legislation until such time as the commission gives clarity on the issue."

Fine Gael leader Enda Kenny said the Government's levy on the health insurers was likely "to be paid for by the customer when the insurers increase their premium". He asked if the Government had had discussions with the insurers on premium increases that would be passed on to the customer.

The Tánaiste said, "it is in that context that the decision was made by the Government on the health insurance initiative". The matter of premiums "is a matter for the companies involved".

Mr Kenny described the Minister's announcement about the health initiative as "confusing" and had to repeatedly ask whether the tax changes were "a tax credit or tax relief". "The legal interpretation is that it is a tax relief measure in the form of a tax credit," Ms Coughlan said. "It will be passed on through the premium."

Labour health spokeswoman Jan O'Sullivan said that "if the legislation already in place was struck down by the courts, I cannot imagine that this will ever stand up." She said they were "to be asked to pass legislation prior to the approval of the European Commission, without any idea of whether it is going to be enacted".