BUPA price hike 'less than rise in cost of hospital beds'

BUPA Ireland says its latest price rise is just slightly less than this month's 10% increase in the cost of private beds in public hospitals.

The average increase applying to BUPA health insurance policies renewed on or after March 1 is 9.5%, but its most basic policy will only increase by 6%.

BUPA, which has almost 450,000 members, said it wanted to keep health insurance affordable for as many consumers as possible.

While the increase in the cost of beds was a factor, the price rise had been introduced to cover rising health care costs, a spokesperson for the company said.

The spokesperson also stressed that the price increase was completely separate from the risk equalisation issue now the subject of a High Court challenge.

Last September, the VHI announced a 12% price increase and, in a bid to deflect criticism, pointed out that they expected a 17% increase in claim settlements. The VHI said it expected pay-outs to increase to €880 million for 2005 and that the €1 billion barrier would be smashed by the end of 2007.

BUPA has claimed that a family of two adults and two children choosing its popular Essential Plus product instead of the VHI's Plan B Option would save €189. From March 1, BUPA's Essential Plus (no excess) will cost €1,424.38, compared to the VHI's Plan B Option at €1,613.76.

The newest entrant to the health insurance market, Vivas, increased its prices by 6.5% last November and its WE Level 2, plus Day to Day Level A, for two adults and two children now costs €1,471.75.

In reality, however, no two health insurance policies are the same and consumers should always shop around. By law, they are entitled to switch insurers without incurring a penalty.

The recent decision by Tánaiste and Health Minister Mary Harney to trigger risk equalisation could result in BUPA having to pay tens of millions of euro to the VHI. BUPA is to challenge the introduction of the scheme in the High Court on February 7 next and has threatened to pull out of the market if they lose.

The legal action is expected to take a number of weeks but, whatever the outcome, the losing party is expected to appeal the decision to the Supreme Court. The VHI is a party to the proceedings.

The Health Insurance Authority claimed last year that BUPA was making "super normal" profits, a charge strongly rejected by the company.

This week VHI chief executive Vincent Sheridan sent a letter to subscribers expressing surprise at BUPA's challenge to risk equalisation. He said the insurance body competed for business in Australia, where such a system existed.