Call for VHI 8.5% increase to be rejected

MANY families will pay more than €1,800 a year for medical cover after the VHI announced an inflation-busting 8.5% hike from September.

The rise of €141.10 a year for popular family plan B policy comes despite inflation averaging 4.9% and VHI’s profits of €70.3 million for the year to February.

Yesterday, consumer watchdogs urged Health Minister Mary Harney to reject the rise while VHI’s rivals urged customers to shop around for a better deal.

“This rise of 8.5% is an extremely high burden on consumers who are already overburdened with rises in other bills,” said Dermott Jewell of the Consumers’ Association of Ireland (CAI).

“We acknowledge that medical costs are going up, but the VHI has 50 years of negotiating (with the medical profession) and they should be tougher on costs.”

The CAI is to take its case to Ms Harney who has four weeks to reject VHI’s proposal for an increase.

Under the VHI plans, a family plan B policy will rise to €1,801.10 a year or €150.09 a month.

For an individual, the cost of a plan B policy will rise to €658.60 a year, equivalent to €54.88 a month.

The proposed 8.5% average rise comes after VHI recorded a €70.3m profit last year after losing €32.3m the year before.

Earlier this month VHI dismissed speculation that it would apply for a 15% rise after reports revealed the health board told the Government it needed large increases to build up its cash reserves. The Government wants the VHI to build up cash reserves so it is on an equal footing with competitors Quinn Healthcare (formerly Bupa Ireland) and Vivas, which have to retain such a cash fund in case of emergencies.

Yesterday, Fine Gael said consumers would be puzzled about why VHI was asking for an 8.5% rise when profits are at €70.3m.

“If the Government is serious about curbing inflation then Mary Harney should refuse this increase,” said FG health spokesman Brian Hayes.

But Kevin Kinsella, a healthcare specialist with the Mercer business consultancy predicted consumers could see further rises in future.

“While the increase initially seems high it’s consistent with medical inflation.

“Unfortunately such price increases are likely to continue in the short to medium term.”

VHI rival Quinn, which bought out Bupa Ireland earlier this year, urged consumers to switch and pledged families could save up to €500 a year.

“VHI prices have risen in excess of 40% over the past four years whereas prices in the motor insurance market have fallen by more than 40% over this same period,” said Quinn spokesman Brian Bell. “This is a clear indication that state supported monopolies create inefficient markets to the disadvantage of the consumer.”

Vivas Healthcare, the smallest insurer in the market, said it could save families up to 24% following the hike.

Defending the rise VHI boss Vincent Sheridan predicted other insurers would have to follow the health board’s rise. “We’re still committed to keeping costs at a minimum; it’s not a case of upping prices for the sake of it. We have to facilitate access to new drugs and they cost more money.

“The cost of healthcare is generally one of the few areas where Ireland is still cheaper than the rest of Europe and we (VHI) must take a lot of the credit for that.”