THE price of health insurance is to rise by almost 50pc next year under a scheme devised by Health Minister James Reilly.
Premiums will soar as the Government drives through plans to charge insurance companies for anyone with health cover who uses a public hospital.
The change will mean everyone with insurance will be charged by the hospital, whether they get a private bed or not.
The plan was delayed this year, but the Department of Health has already budgeted to generate €60m from this in 2013, the Irish Independent has learned.
It means Dr Reilly is now financially committed to changing the law.
This will allow public hospitals to charge insurers every time a person with a health policy goes into a state hospital, resulting in a massive impact on the premiums charged by VHI, Laya, Aviva and GloHealth.
The VHI has already warned that it will be forced to increase its premiums by up to 45pc if new rules come in.
The Department of Health charges a daily rate of just over €1,000 to insurers for a private bed in a state hospital.
It costs €75 per day for a public bed in a public hospital.
Dr Reilly is under pressure to cut millions of euro from his department's €13.5bn budget.
But insurance expert Dermot Goode said the minister's plans "will definitely lead to higher premiums" for families who have already had to cope with steep hikes.
"Given that the public hospitals will now be able to charge around €1,000 per night instead of €75 per night for these beds, the impact will be significant," said Mr Goode, of www.health insurancesavings.ie.
"There is no doubt that this will be passed on."
The changes will have a particular impact because health insurers are not allowed to negotiate the prices charged by public hospitals. This is in contrast to the situation with private hospitals, where they can demand better terms.
As well as increasing premiums, health experts said the move may force insurers to redesign policies so that only certain public hospitals are covered.
This would mean that the likes of VHI or Laya may only cover one public hospital in each county, with the insurers offering more cover for private hospitals.
The 2.1 million people who have private cover are already reeling from cumulative price hikes of 20pc over the past year.
Since 2009 the cost of the average policy has doubled.
A total of 66,000 people cancelled their health cover in 2011 because of a succession of premium hikes, and 54,000 have dropped their cover in the first nine months of this year.
A spokeswoman for the Department of Health told the Irish Independent: "Primary legislation will be introduced during 2013 to provide for charging of private in-patients in public hospitals where they are not in a designated private bed.
"On that basis, Budget 2013 has provided for additional patient income of €60m in 2013."
The move to force insurers to pay up when their members use state hospitals comes at the same time as a planned increase of 23pc in the levy to be imposed on every health policy taken out. In March, a new set of levies will be imposed on every policy in a move that will add close to €200 a year to the cost for a typical family.
There is currently a levy of €285 on every adult's health policy, with a €95 charge for children. The rules change will mean new levies increasing by up to €180 for a family of two adults and two children.
And the new levy for children who have a plan that allows them to be treated in a private hospital will jump to €120, a rise of 26pc.
The levy for adults whose plan entitles them to treatment in a private hospital will rise by 23pc to €350.