Tens of thousands of health insurance customers are facing significant hikes in their annual bills under controversial proposals due to be considered by Health Minister Simon Harris.

A high-powered Dáil body is to tell the Government to scrap or phase out the tax relief on health insurance in a move that will send the cost of policies rocketing.

The Oireachtas Committee on the Future of Healthcare will argue that the tax relief is effectively a subsidy for private insurance firms and should be scrapped, the Irish Independent can reveal.

It is also set to recommend the elimination of the inpatient charge for public patients as well as the slashing prescription charges for medical card holders from €2.50 to 50 cent.

The threshold for drug reimbursement should be significantly slashed, and charges for emergency departments should be phased out in the coming years, the report says.

But the proposal to scrap the tax relief is highly controversial - and is now the subject of major differences among committee members.

Such a move would add €600 to the annual cost of health insurance for a typical family.

Scrapping the tax relief would hit older people particularly hard, experts said.

Read More

The new committee, which was a central component of the Programme for Government, was tasked with devising a "long-term vision" for healthcare.

But hearings have been fraught with problems with Fine Gael now threatening to vote against the final document. Central to the row is the proposal to abolish the tax relief on health insurance.

The committee's draft report, seen by this newspaper, recommends that public money should only be spent in the public interest for public good. It argues that the tax relief is effectively a subsidy to private companies offering healthcare insurance.

However, the proposal is already causing deep political divisions - with Fine Gael sources claiming that its members could veto the final report.

The 14-person committee, which is chaired by Social Democrats TD Róisín Shortall, is due to produce its final report in a matter of weeks.

Significantly, the Government has already indicated that the committee's recommendations will form the basis for an overhaul of health policy. The committee is proposing healthcare reforms over a 10-year period.

Speaking to the Irish Independent last night, Ms Shortall said that such a proposal, if agreed, would be introduced in the latter part of the term.

Affordable

"Our aim is to develop a single-tier health service and to make healthcare more affordable for everybody," the Dublin West TD said.

Fine Gael sources said the controversial proposal to abolish the level has being pressed for by Ms Shortall, Sinn Féin and other left-wing TDs.

The draft document does include the caveat that removing the subsidy "may cause (further) hardship for those with private insurance" and "may cause stakeholder unrest".

But sources say the majority of the committee is likely to back the plan.

The details of the controversial proposal comes days after the levy on health policies went up by 10pc to €443 per adult.

And already this year there have been double-digit rises in the cost of cover. VHI, Laya and Irish Life have blamed the rising costs of claims for medical procedures, with hospital double charging also blamed by Laya and Irish Life.

Health insurance expert Dermot Goode said any move to remove the tax relief on policies would force thousands of people to abandon their cover.

He said the relief reduced the cost of a typical plan by €600 a year for a family. "This does not make any sense. It would be a disastrous move and would force young people in particular to drop their cover. The system needs a flow of young people."

Mr Goode, of TotalHealthCover.ie, said: "Older people will be particularly hard hit in terms of their ability to hold on to their cover. They need top-level cover."

He said a proposal to remove the tax relief was hard to justify when the public system was over-burdened. "If the public system was functioning properly you could justify this, but it is not."

Irish Independent