Cost of private health insurance set to increase by at least 5%

THE cost of private health insurance is expected to rise by at least 5% next year after the Government’s surprise announcement of a 25% price hike in the cost of private beds at public hospitals.

Up to 1.5 million private patients have already been forced to absorb huge price rises, with Voluntary Health Insurance (VHI) and BUPA increasing premiums by 36% and 37.7% since 2001.

VHI said yesterday they would expect the price hike revealed in the 2005 Estimates will force them to seek price hikes of at least 5% in next year’s review.

Newcomer to the market, Vivas Health and BUPA were keeping their cards closer to their chests and said they will examine the Estimates increase as part of their annual review of costs.

“The exact impact of the increase in charges has yet to be assessed and its potential impact on our premiums will be evaluated in line with all other medical inflation at the appropriate time in our review process,” a Vivas Health spokesman said.

“The rise will definitely impact on costs but at this stage we don’t have a ball point figure,” a BUPA spokeswoman said.

VHI has two-thirds of the health insurance market and so commentators believe that they are better able to absorb cost increases than competitors. Mercer independent healthcare consultant Aonghus Loughlin said that the 25% hike took the sector by surprise.

“There have been rises of maybe 15% before but this is substantial and due to the growing rate of medical inflation, a price rise will have to passed on to customers.

“However, until waiting lists falls, there will continue to be a growing Irish health insurance market,” said Mr McLoughlin.

“Because of the principle of community rating which means a 25-year-old is charged the same premium as an 80-year-old, health insurance costs here are still cheap compared to Britain and the US.”

Private beds in public hospitals are frequently targeted by the Department of Finance when they are seeking to raise income, as a gap still remains between the cost to the insurer and the so called “real economic cost” of the bed.

“Payments by health insurers still don’t cover all the costs of having a bed taken up by a private patient. So, it’s relatively increase to justify increasing the charge,” said Mr O’Loughlin.