‘Vicious circle’ of health cost hikes blamed on State

Private health insurers have accused the Government of “perpetuating a vicious circle of rising premiums” for holders of private health insurance following the latest hike to the health levy.

Yesterday, Jim Dowdall, Glohealth chief executive, said it was “farcical, bizarre, and absurd” that Health Minister James Reilly was continually calling on health insurers to drive down costs “when government policies have been the overwhelming driver of rising premiums in recent years”.

The decision to hike the health levy will push it up from €350 to €399 per adult, representing a total increase of 149% since its introduction at €160 in 2009. The cost per child is also set to increase to €135, representing a hike of 155% since its introduction.

The money collected is used to fund tax credits for older people with private health insurance who would otherwise be charged a higher premium given their higher risk profile.

However, with the exception of the vhi which welcomed the move against a backdrop of having the highest market share of older people, private health insurers were unanimous in their condemnation.

Laya healthcare MD Dónal Clancy said while they supported community rating (charging everyone the same price for the same policy, regardless of age), it was “fundamentally wrong that a member who is finding it extremely difficult to pay for private health insurance on a relatively low-level scheme is paying the same levy rates as those on higher level plans”.

The levy is expected to add almost €330 to the annual cost of healthcare for a family of two adults and two children, when taken in tandem with the recent budget decision to cut tax relief on private health insurance. The rising costs are expected to drive at least another 60,000 out of the market next year, bringing the total numbers quitting the market to 300,000 in five years.

Aviva Health said the cumulative impact of the Government’s actions over the last six months will be to “exacerbate this trend” of customers cancelling their insurance policies.

Yesterday Mr Reilly admitted there was “grave concern” over the number of people abandoning their health insurance as the cost of policies rise.

But he said it is up to insurance companies themselves to reduce costs and scale back the profits they are making from younger, healthier policy holders.

“Health insurance is a profitable business. The greatest profit is taken from those who are the youngest and the fittest because they don’t use the insurance,” Mr Reilly said.

“Insurers don’t have to pass this on. They could reduce their profit on this group of clients and not pass on the cost of the levy on them,” he told RTÉ Radio.

Earlier, the Fianna Fáil leader Micheál Martin said the Government should reverse the budget decision to cut the tax relief available on private health insurance payments.

Health insurance analyst Dermot Goode has predicted the latest move will lead to another rise in premiums of between 10%-15%.


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