VHI profits hit €62m. Its reaction: hike prices

THE Government has approved the latest increase in VHI subscriptions just days before the company announces its highest ever financial surplus.

The State-owned health insurance company will report profits of around €62 million for the 12 months to the end of February when its annual report is published later this week, according to highly placed health service sources. Last year it had a surplus of €34 million.

Despite the record surplus Health Minister Micheál Martin on Friday effectively gave the green light to the company to increase its subscription rates from next September. Under legislation, Mr Martin had four weeks to veto the increases after they were notified on June 22, but has declined to exercise it.

The latest increase of 3.8% for VHI’s five main insurance plans, A to E, brings the cumulative increase in subscriptions to more than 30% since the general election in 2002. It follows increases of 18% in September 2002 and 8.4% in September 2003. Meanwhile, the company’s ‘Options’ plans will increase by 2.5%.

The adult premium under the insurer’s most popular plan, Group Plan B, will rise from its 2002 cost of circa €364 to €480 when the latest increase takes effect in September, an increase of €116 in two years.

The new fees for a family of two adults and two children will now be €1,314, an increase of more than €320 compared to 2002.

VHI declined to comment on its surplus for the year on the basis that it was obliged to provide a copy of its report to the Oireachtas prior to announcing financial details.

However, speaking last month when the company lodged its application for a price increase, VHI chief executive Vincent Sheridan said the accounts to the end of February last would be “very positive”.

Already, the increase has been criticised.

The Labour Party’s health spokeswoman Liz McManus pointed out that any time VHI has sought an increase, it has been granted.

“What is it all about? Is it to lead to privatisation? Already there’s a bill to change the corporate status of VHI. I would be concerned that privatisation is a long-term objective of both the VHI and the Government,” she said.

Fine Gael’s Dan Neville said that over the past two years, VHI had got the go-ahead for what amounted to “savage increases” totalling over 30%.

“Health inflation is higher than general inflation but it has not been anywhere near 30% over the past two years. Mr Martin has failed in any of his statements to explain or justify why such increases should take place,” said Mr Neville.

At the time of the application last month, Mr Sheridan justified the increase. “This 3% average increase is significantly less than previous years, and is also significantly less than the rate of increase in the cost of medical care, currently running at over 10% per annum,” he said in a statement.

VHI has said that the revenue generated by the latest increases would only be used to finance new benefits and services for members such as coverage at a new private hospital in Galway and enhanced maternity and MRI benefits.

Mr Martin’s spokesperson confirmed that the increase went through this weekend.