Health Minister James Reilly asked for the health insurance tax relief cut to be revisited, the Irish Independent has learnt.
But Dr Reilly's concerns about the issue were "shot down" by Finance Minister Michael Noonan at a meeting of the Cabinet sub-committee on health earlier this week.
The Health Minister's reservations are understood to be shared by senior figures in the Labour Party.
The change is set to see rises of between €50 and €800 a year in the cost of policies. But it has also emerged health insurers are set to impose separate hikes of 10pc in the coming weeks.
The premium increase was planned even before the changes announced in the Budget, where the tax relief on policies was reduced and the cost for insurers of a private bed in a public hospital was increased.
Dr Reilly's request on Monday reveals concern in both Fine Gael and the Labour Party at the impact of the change to the tax treatment of health insurance policies.
The minister did not put forward a specific proposal for amendment of the decision. But his move was viewed as a further example of Dr Reilly's political naivety and deteriorating relationship with Mr Noonan in the wake of the Budget.
The level of tax relief on health insurance policies was restricted to €1,000 per adult and €500 per child.
Dr Reilly brought up concerns about the health insurance relief at the meeting in Government Buildings on Monday. "Noonan shot down any suggestion of a pull-back on that. You can see why Noonan is around for as long in the game. He nailed it. He was not happy at any suggestion there would be a row-back.
"This is a tax matter. Don't f*** with tax matters. He didn't use that language but the message was clear. There was no raising of the voice," a senior government source said.
In a move that is likely to force thousands more people out of the market, more increases in health premiums are on the way.
Health insurance expert Dermot Goode said the main insurers were already preparing to raise premiums by between 10pc and 15pc in December.
These hikes had been planned before last week's Budget bombshell on tax reliefs, and are separate rises to the ones brought about because of the limiting of tax reliefs.
The new increases will mean that the rises would be in place for January – traditionally the busiest time for policy renewals.
Mid-range policies favoured by families are likely to rise by about €150 per adult if premiums go up by 15pc.
The head of the State's second largest health insurer, Donal Clancy of Laya, confirmed prices were on the rise.
"Well, they are not going down," he said. The large numbers of young people giving up health cover and medical costs inflation were driving higher prices, he added.
More than 250,000 people have given up health cover since the downturn, most of them younger people.
This, combined with the reduction in the tax reliefs, the Government imposing €30m in extra charges on insurers for using public hospital beds and an expected rise in the levy imposed on all policies, would drive premiums higher, Mr Clancy said.
The levy is to keep similar policies at the same price, irrespective of the age of the subscriber. Dr Reilly is understood to be looking at increasing this levy, known as the risk-equalisation levy, in the coming weeks.
Laya, which has about 500,000 customers, has had two price rises this year.
A typical family-type policy has shot up by 150pc since the downturn in 2008.
The VHI denied it was planning any additional price rise this year. It revealed that it has had to rewrite to thousands of members this week following changes in the Budget to tax reliefs.
This has meant the VHI has had to tell anybody renewing after October 16 that they will now have to pay even more for their cover.
These people were already facing an average 6pc rise in premiums announced by the VHI earlier in the year.
But the changes in last week's Budget mean that the cost to consumers of health policies has risen by between 3pc and 20pc.
The net price which subscribers have to pay for top-level plans will increase by about 20pc because of the government move.
This will see the VHI's Healthplus Platinum (the former Plan E) rise by a little less than €800 per adult.
Other higher-end health insurance plans, such as the VHI's Healthplus Premium (the former Plan D), will increase by 18pc or by nearly €500.
Even reasonably priced plans, such as VHI's One Plus Plan, is set to rise by €40 because of the capping of tax reliefs.
by Fionnan Sheahan and Charlie Weston