A number of private health insurers have reacted to the Department of Health's decision to increase the levy on policies, aimed at safeguarding the system of community rating.

No health insurer has indicated that it plans to pass on the increase to customers at this point.

VHI Healthcare, which has 1.2m subscribers, has welcomed the increase, saying it will help fund the costs of older customers.

It says VHI now has eight times the proportion of members in the over 80 years age group than Quinn Healthcare has and six times the proportion Aviva Health Insurance has.

The levy is a system whereby a portion of the premium for customers is re-distributed among health insurers to aid those with older, more costly members.

The levy for an adult is now €285 and a child is €95, an increase in the order of 40%.

Aviva Health Insurance says it will absorb the additional cost of the levy for the moment for its 380,000 subscribers.

Quinn Healthcare says it is disappointed with the increase and that such significant increases are difficult to absorb.

Quinn said the system subsidises the inefficiencies of the VHI.

However, it said that it currently has "no plans to increase the cost of our schemes".

VHI Healthcare says it will not be passing on the cost of the levy to its customers.

Minister for Health Dr James Reilly said the changes are designed to result in no overall increase in premiums.

A decision is expected soon from VHI on its price increases for 2012, arising from the separate Budget decision to increase charges for private beds and other changes.

Fianna Fáil health spokesperson Billy Kelleher has described the scale of the increase as extraordinary

He said the cost of private health insurance had already gone beyond the reach of thousands of people and that ultimately the new costs will be borne by customers.