Financial Resolution No. 6: Income Tax

(1) THAT section 470 of the Taxes Consolidation Act 1997 (No. 39 of 1997), as it relates to relief for insurance against expenses of illness, be amended in subsection (1) -
(a) by inserting the following definition:
“ ‘child’ means an individual under the age of 18 years or, if over the age of 18 years and under the age of 23 years, who is receiving full-time education and is dependent on the individual with whom the contract is effected;”,
(b) by substituting the following for the definition of “relievable amount”:
“ 'relievable amount', in relation to a payment to an authorised insurer under a relevant contract, means -
(a) where the payment covers no benefits other than such reimbursement or discharge as is referred to in the definition of 'relevant contract', an amount equal to the full amount of the payment reduced by the amount of credit due (if any) under section 470B(4) and credit due (if any) under a risk equalisation scheme (within the meaning of the Health Insurance Act 1994), or
(b) where the payment covers benefits other than such reimbursement or discharge as is referred to in that definition, an amount equal to so much of the payment as is referable to such reimbursement or discharge reduced by the amount of credit due (if any) under section 470B(4) and credit due (if any) under a risk equalisation scheme (within the meaning of the Health Insurance Act 1994 (No. 16 of 1994)), provided that in respect of a relevant contract renewed or entered into on or after 16 October 2013 the relievable amount in respect of any payment made under a relevant contract, in respect of any 12 month period covered by that contract, shall not exceed the aggregate of –
(i) the lesser of the relievable amount attributable to each individual, other than a child, to whom the relevant contract relates, or €1,000 in respect of each individual, and
(ii) the lesser of the relievable amount attributable to each child to whom the relevant contract relates, or €500 in respect of each child,
and where the contract is for a period of less than 12 months or being for a period of 12 months is terminated before the end of that period, the relievable amount shall be reduced proportionately.”.
(2) THAT this Resolution shall have effect in respect of relevant contracts (within the meaning of section 470 of the Taxes Consolidation Act 1997) entered into or renewed on or after 16 October 2013.
(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

I am in substitute time now, but we will make it up as we go along, if we do not get help.

The Minister never needed any help.

The resolution provides for the introduction of a limit in respect of the relievable amount of medical insurance premiums on which tax relief will be granted. The provision is effective in respect of policies entered into, or renewed, on or after 16 October 2013. The resolution provides that a maximum relievable amount of €1,000 per adult and €500 for each child covered by the policy will apply. Where the premium for a particular beneficiary under the policy is less than the relevant limit, relief will be restricted to the actual premium paid.

A child for the purposes of this particular provision includes a student over 18 years and under 23 years who is in full-time education. These ceilings are being introduced as the cost of the tax relief has increased significantly in recent years, from €404 million in 2011 to €448 million in 2012 and €500 million in 2013.

In the absence of the measures here today, the cost to the Exchequer could be expected to continue to grow as premiums increase further. Given the ongoing expenditure cuts to the health budget to meet overall expenditure targets, the continuing increase in the cost to the Exchequer of this particular relief cannot be sustained.

The Commission on Taxation in 2009 recommended that while tax relief for medical insurance premiums should be continued, it should be on a more limited basis. The commission did acknowledge that medical insurance is expensive, and that medical insurance relief plays a part in attracting and retaining individuals within the medical insurance system. However, it also considered the relief consisted of a large element of deadweight.

There are a wide variety of policies available in the market, offering different levels of cover at different premiums. The introduction of a maximum ceiling per person, which will qualify for tax relief, will impact on the most expensive of these policies and given that the pricing structure of such policies reflects superior levels of cover, it is not likely that the tax relief is a critical element in an individual’s decision to purchase one. In fact, the introduction of such an upper ceiling acts to retain tax relief for policies which offer good levels of cover, while limiting Exchequer exposure to policies with significant premiums. Therefore I am today introducing a limit on the amount of relief available for premiums. This is expected to yield €94 million in 2014 and €127 million in a full year.

The Government is working off flawed figures on this. Approximately 90% of adult premiums are over the threshold of €1,000. The Health Insurance Authority in a report earlier this year stated the average premium paid per insured person including children in 2012 was €1,048. The premiums for children are significantly lower, and in some packages they are free, so when they are taken out of the calculation the average insurance premium for an adult is well in excess of €1,000. The provision announced today will mean an increase of between 5% and 22% on premiums for adults in the private health insurance system. To put this in plain English, someone on VHI Plan B Options, which is not a gold-plated policy by any manner of means, pays €1,830 at present, the gross cost is €2,300, and the person will face a 15% increase in premium as and from tomorrow morning because of this. On top of this, the €30 million announced in additional bed charges will see an extra 5% to 10% being levied on top of insurance premiums. This is on top of increases coming down the track with regard to medical inflation. Someone on VHI Plan B, which is a pretty basic health insurance policy, will, over the next 12 months, face a minimum of a 30% increase in his or her premium, much of which is on foot of the initiative announced in the budget. Will the Minister explain how many people are to be affected by this? I am sure the Department has figures on it. I would like to know because the figures I have are very different to the ones he has. Mine are based on the Health Insurance Authority's annual report.

What is the situation for people who have already received renewal notices? Normally insurers send out renewal notices approximately four weeks in advance to give people the opportunity to shop around. People have already received renewal notices based on the existing tax relief. What will be the situation for them tomorrow morning if they renew their policy? Must the health insurer reissue a new revised statement? What happens if it is due tomorrow? Will a person end up without cover until he or she figures out who will make up the differential?

This has come like a bolt of lightning to the insurance industry. It does not have the systems in place to make the revisions for these particular calculations in the renewal notices which will go out tomorrow, Thursday, Friday and next week. Who carries the can in this regard?

The Minister made the point very well that the cost to the Exchequer is increasing significantly and has increased from €400 million in 2011 to €500 million in 2013. I am blue in the face from explaining to people in this House over the past 12 months that insurance premiums are going through the roof. I have been ignored by the Minister. We need to tackle this issue by the scruff of the neck but the Government is abdicating its responsibility. It will not cost it any more in spiralling insurance costs and more and more people will haemorrhage out of the health insurance system, which will put additional burdens on the public hospital system which is already creaking. I urge the Minister to reconsider this and withdraw this proposal. The Government will be revisiting it very soon because it is ill-thought-out. The figures do not stack up. Perhaps the Minister will clarify this in his response. They do not seem to stack up and it will cause untold hardship for people who have already received their renewal notices.

I support the sentiment and figures put on the record by Deputy Naughten. This measure is extremely ill-thought-out. I am not sure any serious thought was given to it. The Minister, Deputy Noonan, stated in his speech gold-plated health insurance packages would be the only health insurance packages to be affected by this measure. This is incredibly misleading. The vast majority of health insurance packages, as Deputy Naughten pointed out, will be affected by the elimination of this relief. The average cost of a premium for any individual in the State is more than €1,000. With age comes ill health and increased premiums and costs. Older people will be hit disproportionately by this measure and I do not believe this has been well thought out, if thought out at all.

It will automatically add to insurance premiums from tomorrow morning but we do not know precisely by how much. It will probably average in the region of approximately 15%. This is on top of the very well-flagged increases announced by the VHI which are set to begin in 2014. These will average anywhere from 15% to 25%. The substantial increases already felt by ordinary citizens of the State over the past number of years will be dramatically increased from tomorrow and from 1 January 2014.

To put this in the context of the wider budgetary measures, older sick people will be hardest-hit and this is on top of the proposal flagged in the budget to withdraw approximately 35,000 medical cards from those aged over 70, and a swathe of other measures which will disproportionately hit older people in our society, such as the double pension levy being introduced from 2014. The pension levy due to cease in 2014 will now become double pension levy. DIRT tax is being dramatically increased and this will hit older people's savings, many of whom worked hard all their lives to build a nest egg.

All of this combined amounts to a draconian approach to older people in this budget. We cannot ignore this. The measure, introduced hastily by resolution this evening, will come into effect from tomorrow morning without any real costings or real figures being given to the House, which is not acceptable. I have major concerns. I hope the Minister can provide assurances to the House, although I doubt it.

This is one of the ultimate head-in-the-sand measures from this budget. It is unfortunate that the Minister, Deputy Reilly, is not here in the House to defend it. I was very annoyed by the Minister, Deputy Noonan's characterisation of plans as "gold-plated", as if they are some sort of luxury for people. I want to give an example of what a so-called "gold-plated" plan is. I was contacted this evening by a young woman who suffers from chronic pain syndrome. She has to travel from Mayo to the national pain centre at St. Vincent's Hospital every two months to have a box in her stomach filled with pain relief medication. She has a very high VHI premium due to using that service but there is nothing gold-plated about that. That woman is on disability benefit of €188 a week and is still managing to pay her VHI because she cannot depend on the public system, but this measure will cost her €150 extra a year and she does not have it. There is nothing gold-plated about that kind of experience. There is nothing gold-plated about the 20,000 people aged over 70 who tonight face losing their medical cards. They are paying a higher VHI premium, not for gold-plated services but for basic services and comforts at that stage of their life, but they must now face the prospect of the little tax relief they are getting on their VHI being gone or reduced.

When one considers the restrictions to medical card eligibility, the increase in prescription charges and the further €666 million to come out of the health service within the next three weeks - perhaps that is where the Minister is tonight - this measure is completely ignorant of the reality of health insurance today. People are leaving in their droves yet we are now going to drive more people into the public hospital system, which cannot cope and is about to take another cut of €666 million. The characterisation of "gold-plated" shows an ignorance of the state of health insurance and of the kind of restrictions on health insurance packages in recent years which have made the plans more basic. What we are going to do is drive more people onto waiting lists and into the public system, which is already at risk. People with chronic illnesses, who depend on their health insurance cover to give them a little comfort and relief, are looking at this tonight and wondering why they bother to pay health insurance. All we will do is add to our ever-growing problem.

It is unfair that the two Ministers opposite have been left in the House while the Minister, Deputy Reilly, has gone missing again - he has gone back into hiding, by the look of it. This is a very unfair measure. It will hit people who are suffering very hard.

I add my support to those who have spoken, in particular Deputy Naughten, who presented the figures. I believe the Government is hell-bent on ensuring people no longer have any incentive whatsoever to take out their own private health insurance. Families struggle weekly to put their bit of money together to ensure they can pay for private health insurance. All that has happened is that they have continuously got kicked in the teeth from this Government. The message going out from the Dáil tonight - from the Ministers, the Government and those who support them - is that anybody who has private health insurance would need to reconsider what they are doing. This extra increase is an attack on them at a time when they are already struggling.

All of us in this Chamber know that people who have had private health insurance for a long time want to keep it because they believed in it and thought it was right to provide for their own health care, but they are getting the wrong message from the Government today. In forcing this through, I believe the Government has not thought out its full implications. As my colleagues have stated, all it will do is drive people away from private insurance and put them onto the public waiting lists, which are completely unable to deal with the volume of people who are already on those lists.

I do not know what the Minister or those in the Department were thinking when this was drawn up. Like my colleagues, I too ask what the Minister for Health is doing tonight. It is like when the Seanad issue was being debated out in Donnybrook and the Taoiseach thought it was more sensible to launch a book. I ask what is the Minister for Health doing tonight that is more important than being inside here to answer the questions-----

He is reading the book.

Yes, perhaps he is reading some other book. It is ridiculous. What are the priorities of this Government? Has it not learnt from the debacle of the Seanad referendum, where it took its eye off the ball? Would it not have the people in the places they are supposed to be when they are supposed to be there to answer the questions, and treat the House with a small bit of respect? It is budget night. The Minister for Health should be sitting here and taking the questions which concern his own Department. I mean no disrespect to the two Ministers present but he should be here.

If I was convinced this was for the gold-plated policies, I would be persuaded to support it, but I am not persuaded of that. We all know the cost of premia, and €1,000 is not a large figure for an adult and €500 is not large for a child. Most people will have budgeted for the year. As was said, if somebody has just taken out a premium in the last month, will they be impacted by this? If this is the case where people have already made decisions, it is unfair and this almost becomes a retrospective adjustment for them.

With regard to the packages which include free cover for children, the cost for the adult is increased in such packages so it is not easy to simply break down costs to €1,000 or €500. The packages are being offered to make them family-friendly, if one likes, but there is a pick-up on the adult side.

A large number of the people I come across should not have private health insurance at all but they have it because they do not have confidence they will be looked after in the public system. That is the origin of many of these policies that people are trying to keep on the go, even though they really cannot afford them.

The cost on the other side has already been alluded to, and I believe there will be a cost. The more people who drop out, the more dependence there is on the public system which, as we know, is creaking in many respects. One wonders if it will be able to bear the extra load if many people drop out because of this, given there are many who are tinkering on the edge and wondering whether they can afford insurance. For many people, this may be the straw that breaks the camel's back.

I cannot understand how this resolution has come before the House tonight. We have been waiting a long time for a White Paper on universal health insurance. There was a commitment from the Minister in the context of making sure families would not be under undue pressure yet, time and again, we see a relentless rise in health insurance premia for ordinary families.

The Minister, Deputy Noonan, is a very clever man. His language today spoke of "gold-plated" policies. As the Ministers present well know, there is nothing gold-plated about a family which makes extreme sacrifices to fund itself in the context of paying its health premium, thereby lightening the burden on the State with regard to the provision of health care. We are being asked tonight to ensure that families who make huge sacrifices are recognised.

We have tabled motions on this in the House time and again.

The Health Insurance Authority has highlighted the fact that families are under huge pressure, which has also been said in this House repeatedly. We have consistently advocated that something must be done to alleviate the burden on families who are finding it very difficult to maintain their private health insurance. They are doing that so they will not have to ask the State to cover the cost of their health treatments. This is an assault, in principle, on people who are doing their best to lighten the load of the State in the provision of health care. In one fell swoop, the Government is saying in this measure that it will penalise people further for trying to ensure that they and their children have health insurance.

Then there is the grand plan of universal health insurance, which is to force everybody who can afford it to take out health insurance. The State will pick up the tab for those who cannot afford it. In this respect, it is an affront to suggest that somehow people who have health insurance are all gold-plated. The vast majority of people who have private health insurance are ordinary hard-working families who make sacrifices each day. When it comes to paying their health insurance premia, they make decisions as to whether they will fill the tank with oil, buy clothes for their children or pay their premia. That is the position of families at present. The Minister lumbering a cost of up to €250 on top of the cost of premia through the changes in this proposal will mean that families will simply not be able to retain their health insurance with the spiralling cost of the premia.

There is a Government proposal for universal health insurance in the programme for Government and we are awaiting the White Paper. At the same time, the Minister, Deputy James Reilly, is saying on a continual basis that the spiralling costs of health insurance are the fault of the health insurers and the consultants. Yet, the Government will, in one fell swoop, add €200 to €300 to the costs of families which it says have gold-plated health insurance. Why would the Government consider gold-plated the people who must take out health insurance because they have complications other than those which are covered by normal, traditional health insurance? Ophthalmology, orthopaedics and other areas must now be covered because they are no longer in the standard packages being offered by health insurance companies.

This proposal obviously came from somebody who knows nothing about health insurance, the pressures families are under and the fact that health insurance is a spiralling cost beyond the average family. Week in, week out I submit parliamentary questions asking when the White Paper will be published and when this great proposal from the Government will be produced. In the meantime, this budget is pillaging families who are struggling daily to make their premium payments. Previously, families used to pay their health insurance on an annual basis, but now most people pay it by monthly direct debit. If one looks behind that, one will find that those direct debits are being returned on a continual basis as well, because that is where families are. Now, the Government is asking us to support a proposal that will put huge pressure on them.

This is ill conceived. I have no difficulty with removing the relief from gold plated health insurance, but that type of insurance will fly one to Dubai, New York, Memorial Sloan-Kettering Cancer Centre or some other fine institute. The ordinary family is now being attacked as well. This proposal is ill conceived and I ask the Minister to revisit it. Whoever thought of it has no understanding of the pressure families are under or, as importantly, of the proposal the Government is sponsoring with regard to universal health insurance.

Whatever else happens, this issue should be revisited. Massive savings for the State have been factored in but it is short-sighted, will put families under huge pressure and will burden the State further, even though it is already under huge stress trying to provide public health facilities. I ask the Minister to reconsider this very quickly. We will vehemently oppose it. We have been consistent on this issue, and the parties in Government held that position as well. When they were in the Opposition they consistently pointed out that any increase in health insurance was transferring a burden from private health insurers to the public purse. That is exactly what this proposal will do due to the fact that families will not be able to sustain private health insurance.

I am a firm believer in a universal health care service. I do not believe in tax relief for private health insurance or that it is compatible with the delivery of a universal health service. However, we do not have that universal health service at present.

The Minister spoke about the substantial amount of tax foregone. Due to the changes that were announced in the budget the Minister said €94 million will be recouped to, or saved by, the Exchequer. That would be welcome if, in fact, it was ploughed back into the health service to ensure that the lack of confidence felt by all the people who take out health insurance in this State was being addressed. However, consider the other measures announced today by the Minister, including the fact that €325 million is being taken out of the budget of the Department of Health and the HSE and that there is an increase to €666 million, a figure referred to earlier by the Minister. He is not here to address that figure. Waiting lists are getting longer and we have the debacle with the junior doctors, which the Minister promised to address but which has been an absolute failure. There is a delay with the children's hospital. It was promised to be delivered by 2016 but I doubt that one will see a child in a new children's hospital in this city before 2018, if not later. There is also the fact that the Minister cannot even pay to address the waiting lists for cochlear implants, which we will discuss on Thursday in a Private Members' motion.

There is a raft of reasons that the public does not have confidence in the public health service. I have confidence in it, but many do not. They are scared to give up the payments they have been making into a private health insurance company. Some of them have been paying for many years. They will forego their dinner rather than give up the hope or cover they think they have as a result of purchasing health insurance.

I spent most of today in Crumlin children's hospital and have nothing but praise for those working there. I have been to a number of other hospitals in the last two years. That comes with having young children. Every one of them had a waiting list and every one of them was bursting at the seams each time I visited. Every doctor and nurse I have met is owed nothing but praise for working in the difficult conditions in which they work. However, the savings the Minister spoke about here are not being ploughed into the services on which they should be spent. This is not being ring-fenced.

This is not a move towards a universal health service. It is not even a move towards universal health insurance, which is the direction the Government promised it would take. This is, in fact, another grab by the Department of Finance which will be spent elsewhere or put into the black hole it has created. I urge the Minister to ring-fence this money to ensure that this and any other progressive move to remove tax reliefs from private health insurance in the long run is ploughed into a universal health service. That is the way the State should be going. It is the way a progressive state would deal with it.

Those who wish to pay for private health insurance will do so, understanding that they will not get the benefit from a public service. I will not support the measure because the Minister is not ring-fencing the savings to improve the public service that is already creaking at the seams.

Five Members, including the Minister, have yet to speak, so I ask for everyone to co-operate to allow everyone time to speak.

A publicly delivered universal health care service should obtain in society and it should be a right of every citizen to have comprehensive health care of the highest quality paid for from general taxation. There should be one health service of the highest quality for all. On the contrary, in our society we have a two-tier, totally unjust health service. The wealthy, who grow wealthier by the year despite austerity and recession, have no worries because they can buy anything they want in terms of health care. Many working people on modest to middle incomes, which are also modest considering the outlays, and many families are not eligible for the medical card. A certain level of care, which the medical card guarantees, exists only to a certain degree. Modestly paid workers in the private and public sectors who do not have medical cards feel constrained, frightened and psychologically coerced to take out private health insurance because of the serious lack in the health service in the State. The destruction and damage wreaked on our health service in the 1980s - in a period of capitalist crisis with attempts to resolve it by savaging the living standards of ordinary people and the axing of the public sector - still has not been repaired. We are way behind the better European states in terms of health expenditure.

Workers with modest to medium incomes are paying direct and indirect taxes and private health insurance is another kind of tax. The Government says it is moving to the universal health insurance system, the model laid out a few years ago by the Fine Gael Party in its new health policy, which provides for the wholesale privatisation of health care, giving enormous power to private health insurance companies within health facilities and hospitals. We should have the information tonight. Does the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, have the information? I know he does not have a clue because it is not his area of responsibility but the Minister for Health should be here and he should have this information. How many people will be affected by this measure? The Government should have got information from the insurance companies in respect of the type of premia and their wages. We should have a profile of the people, particularly those on modest to middle incomes, affected by this measure. I would support measures such as this if we had a comprehensive, publicly delivered health service of the highest quality for every individual; we do not. This is another grab instead of real tax income being increased and ploughed into our health services and other areas of society. As some of us are sick of pointing out, every 1% increase in a new wealth tax that should be put on the top 1% will bring in more than €500 million a year.

With an emergency wealth tax of 5%, which the top 1% would not miss, it would amount to €2.9 billion. Every 1% of corporation tax, based on an effective rate of 8%, amounts to €500 million a year. A financial transaction tax could also yield €500 million. These amount to billions of euro the Government could plough into remaking our health service from top to bottom. That would remove the pressure on ordinary people to buy private health insurance. That is the approach to be taken and therefore I oppose this measure.

I am utterly opposed to a two-tier health system and utterly opposed to health care only being available to people who can afford expensive private insurance. It is anathema to me. I find it deeply worrying that the Government is committed to the universal insurance model, which is just a recipe to enrich private health care insurance companies and cost society a hell of a lot more in administration and billing costs to run the health service than in delivering front-line health services. This is clearly the case in the United States, which spends more on health than any other country but where huge numbers of people - tens of millions - have no access to health care. The so-called Dutch model is not mentioned much anymore because the evidence of increased insurance costs and the failure of the model to deliver an efficient system is piling up in Holland.

We need a national health service free at the point of demand. If we had a state-of-the-art national health service in which ordinary people have confidence, we would not need private health insurance. The vast majority of people would not seek to take out private health insurance if they had trust and confidence in the public health system. How can they possibly have trust and confidence in a public health system that is being slashed to bits year after year, with billions of euro, thousands of beds and thousands of nurses being taken out of the system? How can they possibly have confidence in it? How can they be encouraged to do anything else than, out of fear and anxiety, fork out money they cannot afford to try to cover themselves in case of ill-health? Now, the Government wants to punish them for doing so. This will punish them for being victims of the cuts the Government and previous Governments imposed on the public health system. I utterly oppose this because, although it is dressed up as being progressive, it will hit low and middle income families who struggle to provide a safety net for themselves in the case of ill-health. That they do so is understandable.

Those who oppose this measure have a responsibility to outline how we could finance the state-of-the-art national health service we could and should have. I am sure the Government will mention this in response. One way to do it is to ensure half of the money does not go into the coffers of private health insurance companies and wasted administration and billing, which is crazy when it should be spent on nurses, beds and health staff. We must ask where we get the money and this raises the question of progressive taxation. As Deputy Higgins mentioned and as some on this side of the House constantly go on about, it means looking at wealth taxes and higher income taxes for those earning over €100,000.

It means looking at corporate taxes. It means looking at financial transaction taxes. Whenever one even raises those issues, all we get from the Government and from half of the media establishment in this country is poo-pooing. They say we do not know what we are talking about and say it is "fantasy economics", because they do not want to touch the wealth of the big corporations and of the very wealthy in society, but it can be done.

Our budget submission questions to the Department of Finance confirmed, for example, that if there was 50% income tax rate on earnings over €100,000, 60% on over €150,000 and 70% on over €200,000, it would raise €1.1 billion. Would that not be fair? I think it would be fair. It would be a hell of a lot fairer than hitting the vast majority of low and middle-income families, taking their medical cards from them or hitting them with this further tax by removing this small tax break, and all the other mean and nasty income cuts and taxes the Government has imposed on them. There are many more measures, such as, as has been mentioned, the wealth tax, and even a small increase in corporate tax. Why will the Government not consider those measures instead of repeatedly hitting the low and middle-income families who are struggling and who are battered?

I appeal again for brevity. There are four speakers and we are against the clock.

The temptation to the Government is to raise €94 million. When I heard the word "gold-plated", I said: "Be careful here, we are in the territory of magicians." We use illusions. That is how magicians work. One does not see how they do the tricks but one gets the feeling that one understands them and one believes what one sees, which is not always the truth.

Let us look at the figures. I thank Deputy Naughten for giving us a bit of fact-finding. Fact-finding is always helpful. Take the B plan Options, the standard non-gold-plated one. It is a Cornflakes or porridge type policy. It costs €2,300 gross per adult. There is a 15% increase imminent, which brings the gross premium for one adult to €2,645. Deduct the €1,000 exemption per this proposal and it brings you to a taxable amount of €1,645. At 20%, that is €329. In a household of two, there will be €658 to be paid, which equates to a Dublin residential property tax.

We were told there would be no increase in income tax. What have I just calculated? That is an increase in income tax. It is not in the headline rate of 41% or USC, but it is income tax. It must be paid out of income and, therefore, it is a tax on income, or else one does not have medical insurance. That is the truth about that.

I was asked what happened here today and I said, "It is a soggy type of budget." It is like when one has a cardboard box that gets soggy in the rain. It was predictable that the Department of Finance, in its two divisions, would hang its arguments, and do its calculations, on the old frameworks. That is exactly what has happened. There has been no imagination. What about a betting tax? The turnover of the betting sector, online, etc., which wreaks havoc in families, is considerable - €2 billion or €3 billion. If one put 5% tax on that, one would get €100 million.

This brings me to the other areas of raising revenues to make society fair and stop the inequality. On inequality, by the way, I will not go over the figures again but they are there if one is honest. In the United States, a neoliberal society, the top 1% of income and wealth of society increased that income and wealth by 30% since Christmas 2008 while the income and wealth of the bottom 40% shrunk by 6%, and the same is happening in this country.

It brings me quickly to foreign direct investment in the Minister, Deputy Noonan's, budget today.

Deputy Mathews is moving a little away from the resolution.

There are many issues that arise. The Minister started off, and stayed, on Ireland's corporate tax. The Minister stated it had three elements, "rate, reputation and regime". What about reality? Deputy Boyd Barrett pointed out correctly that, according to the last year available from the Revenue Commissioners, €70 billion of corporate profits was taxed at €4 billion, that is, an effective rate of 6.5%. Commentators state that taxable profits are different than reported profits. Are they? Are we back to the illusion, defining different expenses and revenues for the purpose of massaging what one wants to pay?

Society deserves better than this. We have many problems. I am an optimist, but based on realism. Such realism must be based on the figures, such as that simple calculation of two adults on an ordinary, non gold-plated plan where the extra tax to be paid will be €658 or else they must fold their hand of cards and say, "we are not having medical insurance". That is not right.

While on the subject of gold-plated, let us go to the armour-plated corporates. The armour-plated corporates need to be revisited. As the Minister may be aware, I have spoken to CEOs of the foreign direct investment, FDI, multinational companies, MNCs, and a 2.5% national-recovery levy for three years would not even make them blink.

I very much share the concerns that have been expressed by earlier speakers about this measure. It is one of a number of measures which will result in the health service going into free fall. The programme for Government sets out a clear plan for transition to universal health insurance but, unfortunately, we are now at a point two and a half years down the road where little or no progress has been made on implementing the programme for Government. We were promised a White Paper which would set out all of the issues concerned in the moved towards universal health insurance. Two and a half years later, there is no sign of that White Paper and I would have to ask does anybody in Government know what is happening in Health. Does anybody in government realise that, as a result of the inaction, and also some of the austerity cuts over recent times, coupled with a number of provisions in today's budget, we will find ourselves soon in a situation where the health service is in free fall?

We are supposed to be moving towards a situation where health services are more accessible, more affordable and more equitable, and the result of these measures today, and actions that have been taken over recent budgets, is that health services will become less accessible, less equitable and more expensive for everybody. On this measures today, whereas we are supposed to be moving towards a situation where more citizens can afford health insurance according to the model set out, already, because of austerity and because they have so little money in their pockets, they are leaving health insurance in their droves, and this will accelerate that process.

I very much object to the presentation of this by the Minister, Deputy Noonan, earlier on where he claimed this was merely about "gold-plated" health cover. This is about hitting those who are struggling to maintain basic cover plans with VHI or one of the other health insurance companies. This measure, which makes health insurance less affordable, will result in increasing numbers giving up their health insurance altogether.

Other budget measures will see 35,000 people over the age of 70 years lose their medical cards. The new income limits and all income limits applying to the over 70s are gross income limits. For example, a joint income of €900 a week for a couple may be regarded as comfortable enough, but it must be borne in mind that when applied for medical card purposes, it is regarded as gross income and there are no offsets for expenses, irrespective of the level a couple in such circumstances may be faced with. No expenses can be written off. It must be remembered that the medical card not only allows a person to access GP services but critically for older people it is also the only way of gaining access to a public health nurse, the local home help service and physiotherapy service from the local clinic. One must have a full medical card to access these services.

The Government is making health care far less accessible to 35,000 people over the age of 70 years. In addition, the other provision in the Budget Statement is to make savings of €113 million from those aged under 70 years by withdrawing a significant number of medical cards - in the region of 150,000 will be withdrawn in the coming year. The medical card income limits have not changed or increased for donkey's years. The limits are actually below the standard rate of social welfare benefit. I am very concerned that we are moving towards a situation where many more people will be squeezed out of cover, whether that is cover they are struggling to provide for themselves by way of health insurance or having a medical card. Sometime in the middle of next year the health service will be in freefall because the centre will not hold within it. There are too many pressures on it and there has been no reform. There will be cuts of €660 million on an already overstretched health service and none of the reforms and changes to the model of care has taken place. A total of 55,000 people with long-term and chronic illnesses expected to have free GP care because the Government had told them they would be included in the first phase of the programme. They are also being squeezed out and denied the essential care they require. Of course, it would have made good sense if the Government had gone with that proposal - the argument about legal advice is entirely spurious - to give medical cards to that cohort of people with chronic diseases. It would have allowed a change in the model of care in order that the chronic disease management programmes could have been introduced which successive Ministers for Health have been promising in the past ten or 12 years.

I share the concerns expressed by other speakers. We are facing a really difficult period in health due to inaction, the lack of joined-up thinking and any plan under consideration by the Government. There is a plan in the programme for Government, but, unfortunately, it has been entirely ignored. We are facing a most horrendous situation where more and more people will be denied basic health care. More and more doctors and nurses are leaving the service and its centre will not be able to hold.

This measure will affect 90% of health insurance plans, not just the gold-plated ones. That sleight-of-hand in the presentation of the measure is to be regretted. There is too much of this in today's presentation, a matter I will deal with more comprehensively in my contribution tomorrow. The presentation of many of the measures announced left a lot to be desired. This measure suggests an incoherence at the centre of health policy. The Government has a policy of encouraging more people to take out health insurance and of having mandatory health insurance by means of a universal health insurance policy - the detail or execution of which is further away by the day - while at the same time an extraordinary scale of cuts have been imposed on the public service, with approximately €660 million worth of cuts. The estimated saving is an additional €127 million in a full year from this measure. In total there will be approximately €787 million in savings overall in health care. I do not know what the Minister for Health, Deputy James Reilly, was doing during the negotiations and the talks leading to this budget; he must have been asleep at the wheel or not engaged in any way. Does he realise what has happened under his watch in this budget as opposed to other Departments? I agree with Deputy Róisín Shortall's apt phrase that the centre simply cannot hold in the health service. Last week we raised the issue of discretionary medical cards and were told we were not dealing with reality. Within four days the Taoiseach had acknowledged it when members of the Fine Gael Party had informed him that people all over the country were losing their discretionary medical cards. Some of the cases are horrendous, such as those involving children with multiple conditions and syndromes being refused cards. People with motor neurone disease are also having their medical cards taken from them. What does today's statement about saving €113 million and probity mean? Is that a transparent presentation of a budgetary measure? When one includes the over 70s, the guts of €150 million are being taken out of the provision of medical cards. There is an absence of detail in the presentation of the measure.

Hospital surgeries are being cancelled because they are running out of money. Hospital procedures are being delayed and cancelled because funds are running out. We need a far more transparent debate about how health services are to be funded into the future and less of this codswallop about universal health insurance and money following the patient. There is no detail attached and no White Paper has been published. Deputy Róisin Shortall was in the Department and has given us the most up-to-date account of the absolute divergence between what is contained in the programme for Government and what is happening in reality. This measure will affect ordinary families. A total of 90% of health insurance plans will be affected and the measure hits hard-working families who are endeavouring to supplement and complement what they can obtain from the public service.

Will the Minister confirm that the chief executive officer of the HSE stands over the figure of €660 million, as presented in today's Budget Statement? I presume he does. It is a pity the Minister is not present to confirm this. Will he also confirm that the Secretary General of the Department of Health stands over the figure of €660 million? Will he confirm that each figure identified in the budget documentation which represents a saving measure can be backed up with the detail one would normally receive in the more traditional Estimates volume but which is in short supply in the documentation we have received to date?

It should be remembered that this all stemmed from a commitment that those with a long-term illness would receive medical cards. That promise has been solemnly discarded and broken, with no explanation or presentation of any legal opinion which has now entered the scene to provide a reason this measure cannot proceed. Those most in need because of medical conditions have most to fear in terms of what will happen next year in respect of medical card eligibility and access to private health insurance. As Deputy Billy Kelleher noted, many people with complex conditions require good packages. It is about more than medicines and prescriptions; it has to do with a range of other measures. The people concerned will be hit hardest by this measure which flies in the face of the Government's stated objective of getting more people into the health insurance sector. Thousands of people have left the health insurance market in recent years, leaving in their droves because of escalating costs. This action will exacerbate the drift from medical insurance policies which we have witnessed. It is incomprehensible and represents incoherence at the heart of health policy and decision making.

I thank the Deputies who contributed to the debate which strayed well beyond what is a tax measure.

It is about choices.

Exactly. It is about choices.

It is about income tax and bad choices.

The choice today is to allocate the tax relief available for health insurance to those who most need it, and that is the principle being applied. The total cost of this measure represents approximately 4% of total insurance premia. The Revenue Commissioners have estimated that the number of policyholders affected will be approximately 577,000, which is a little over half of all those who have insurance policies.

I have examples of the impact of the change. With a policy broadly similar to the old plan C covering two adults and four children, the impact will be less than 2% on the premia. By contrast, the Health Manager Gold plan, which is broadly similar to the old plan E, covering two adults and costing €10,700, will see an impact of €764 or 16%. It is clearly progressive as the people on the very high cover plans, with access to private hospitals-----

What about my example of plan B?

-----would pay a much larger proportion of this measure. This is about allocating the available tax relief for health insurance in the most equitable way-----

There is nothing equitable about it. What about people with chronic illnesses?

-----which is what we are seeking to do in this measure. Of course, we would like to be in a position where we would not have to find €2.5 billion in this year's budget but that is where we are, and we all know why that is so. A sum of €94 million is being found in this area.

It is important to bear in mind the background to this, and most people have spoken about that. There are 1.9 million people with free access to both primary and secondary care, with approximately 2 million paying private insurance. Much of that is paid in order to get preferential access to care, which is an advantage of health insurance, as some care is available in private hospitals. I am surprised to hear such a trenchant argument against a relief that is clearly progressive, and any cursory examination of this would indicate it is progressive. Those on the benches opposite were very strongly attacking it as if it were a regressive policy. It is also consistent with the long-term ambitions that many people, including myself, have to introduce universal health insurance, where people have access to a core package that is allocated equitably and eschews preferential access. This approach is similar as we are concentrating the tax relief on the core packages and curtailing tax reliefs available to the upper end.

One must consider this in the context of the economics. If the taxpayer picks up 20% of the cost of the upper packages, regardless of what is put into them, there will be a major incentive for insurance companies to keep loading on the more expensive packages and seeking to get people to pay more for them.

The opposite is happening.

We are trying to make core services universally available on an equitable basis, and this is quite consistent with that goal. Deputy Naughten asked why there is a move to require private patients who are occupying public beds to contribute more to the cost. That is again perfectly equitable and consistent with the policy being pursued; if public beds are designated for use by public patients but are accommodating people with private access, it is not unreasonable to seek an equitable contribution. That is what has been put forward by the Minister and will come into play here.

Many people spoke in the debate about the collapse of health insurance but the data does not support that. From December 2008 to June 2012, when the cost of health insurance increased by 86%, the number of subscribers fell by 7.5%. When I used to do economics, that was a price elasticity of less than 0.1.

The Minister should speak to a few health economists. They would say the opposite. It is a dangerous position.

That is the number of people taking insurance.

Keep the economists away from health policy.

They might be better at it.

I am only giving the figures to the Deputies. They can interpret as they wish, and elasticity is only a term of description. It is not charged with anything else. The truth is there has not been a mass exodus from insurance. Another factor to bear in mind is that medical inflation is quite low and despite that, health insurance premia are rising rapidly, so the Minister for Health is correct to be concerned about competition and cost-effectiveness within the health insurance industry.

If he is so concerned, where is he tonight?

It is an issue about which we must be conscious and I hope a measure like this will bring about a more cost-conscious insurance sector responding in a market-effective way. Against a background of what we are trying to achieve in this budget, which is to exit the bailout, make room for positive employment creation measures and get more people contributing to our economy to build a better economic and social model, these are reasonable and fair allocations of difficult measures. I accept it is difficult to do it as people are very pressed but this is a reasonable and equitable measure that will generate close to €100 million. I commend it to the House.

Question put:
The Dáil divided: Tá, 99; Níl, 57.

  • Bannon, James.
  • Barry, Tom.
  • Breen, Pat.
  • Bruton, Richard.
  • Burton, Joan.
  • Butler, Ray.
  • Buttimer, Jerry.
  • Byrne, Catherine.
  • Byrne, Eric.
  • Carey, Joe.
  • Coffey, Paudie.
  • Collins, Áine.
  • Conaghan, Michael.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Conway, Ciara.
  • Corcoran Kennedy, Marcella.
  • Costello, Joe.
  • Coveney, Simon.
  • Creed, Michael.
  • Daly, Jim.
  • Deasy, John.
  • Deenihan, Jimmy.
  • Deering, Pat.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Ferris, Anne.
  • Fitzgerald, Frances.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Gilmore, Eamon.
  • Griffin, Brendan.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Brian.
  • Hayes, Tom.
  • Heydon, Martin.
  • Hogan, Phil.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Kehoe, Paul.
  • Kelly, Alan.
  • Kenny, Enda.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lynch, Kathleen.
  • Lyons, John.
  • McCarthy, Michael.
  • McEntee, Helen.
  • McGinley, Dinny.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Maloney, Eamonn.
  • Mitchell, Olivia.
  • Mitchell O'Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Nash, Gerald.
  • Neville, Dan.
  • Nolan, Derek.
  • Ó Ríordáin, Aodhán.
  • O'Donnell, Kieran.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Mahony, John.
  • O'Reilly, Joe.
  • O'Sullivan, Jan.
  • Penrose, Willie.
  • Perry, John.
  • Phelan, Ann.
  • Phelan, John Paul.
  • Quinn, Ruairí.
  • Rabbitte, Pat.
  • Reilly, James.
  • Ring, Michael.
  • Ryan, Brendan.
  • Shatter, Alan.
  • Sherlock, Sean.
  • Spring, Arthur.
  • Stagg, Emmet.
  • Stanton, David.
  • Timmins, Billy.
  • Tuffy, Joanna.
  • Twomey, Liam.
  • Varadkar, Leo.
  • Wall, Jack.
  • Walsh, Brian.


  • Adams, Gerry.
  • Boyd Barrett, Richard.
  • Broughan, Thomas P.
  • Browne, John.
  • Calleary, Dara.
  • Collins, Joan.
  • Collins, Niall.
  • Colreavy, Michael.
  • Cowen, Barry.
  • Crowe, Seán.
  • Daly, Clare.
  • Donnelly, Stephen S.
  • Dooley, Timmy.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Flanagan, Luke 'Ming'.
  • Fleming, Sean.
  • Fleming, Tom.
  • Grealish, Noel.
  • Halligan, John.
  • Healy, Seamus.
  • Healy-Rae, Michael.
  • Higgins, Joe.
  • Keaveney, Colm.
  • Kelleher, Billy.
  • Kirk, Seamus.
  • Kitt, Michael P..
  • Lowry, Michael.
  • Mac Lochlainn, Pádraig.
  • McConalogue, Charlie.
  • McDonald, Mary Lou.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McGuinness, John.
  • McLellan, Sandra.
  • Martin, Micheál.
  • Mathews, Peter.
  • Moynihan, Michael.
  • Murphy, Catherine.
  • Naughten, Denis.
  • Nulty, Patrick.
  • Ó Caoláin, Caoimhghín.
  • Ó Cuív, Éamon.
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O'Brien, Jonathan.
  • O'Dea, Willie.
  • O'Sullivan, Maureen.
  • Pringle, Thomas.
  • Ross, Shane.
  • Shortall, Róisín.
  • Smith, Brendan.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Troy, Robert.
  • Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Seán Ó Fearghaíl.
Question declared carried.