THE COST of health insurance is to be linked to the age at which customers take out their first policies.
Heath Minister Mary Harney is to bring in regulations penalising those who wait until later in life to begin subscribing to an insurance plan.
The aim is to encourage people to take out policies at an earlier age. It is expected to come into force in early 2011, with graded penalties starting for people in their mid-30s onwards. The move is being brought in as the Government prepares to sell off the VHI health insurance company by 2013.
Opposition parties have criticised the planned sale, saying it will do nothing to solve the problems of the health sector.
The proposals were announced at a briefing at Government Buildings.
Ms Harney said the age-linked penalty will only apply to first-time policy holders and not those who switch from one provider to another at a later age.
She said: "If you only join close to when you are availing of benefits clearly there must be a cost penalty attached to that."
She warned that the insurance shake-up was necessary to prevent the cost of policies skyrocketing.
"If we did not do what we did yesterday, Plan B in the VHI was going to double in cost next year. In subsequent years, it could have just trebled."
The minister said the market was "beginning to segment" as VHI lost €170m last year on its over-60s members. The company will not be sold until it reaches the solvency ratios that apply to other health insurers.
Ms Harney said the VHI needed an injection of capital in excess of a possible €300m prior to its sale. This will be met by taxpayers.
Labour's health spokeswoman Jan O'Sullivan said Fianna Fail has no mandate for the plan.
She said the sell-off would do nothing to help the development of a fairer health service.