VHI dismisses claims next price hike will be 15%

HEALTH insurance giant VHI yesterday poured cold water on reports that its 1.56 million members face a 15% rise in premiums in the autumn.

The State-controlled insurer does plan a rise in premiums but said claims of an inflation-busting 15% hike were “mere speculation”.

The reports were based on a confidential dossier to Health Minister Mary Harney last year about the private health insurance industry.

In the dossier, VHI’s management were said to have argued for a 15% rise year-on-year to meet the cost of building up a “solvency” reserve of cash for emergencies.

Yesterday, a VHI spokeswoman said the insurer would notify Ms Harney later this month of its planned rise but said reports of 15% were speculation.

“Premiums traditionally go up because the cost of (providing) the product goes up through new technology, new drugs and new hospitals. It’s not like the cost of a loaf of bread as the cost (of premiums) is set at a level to cover the costs of our members’ claims.”

Over the past six years VHI premiums have gone up 10% a year on average, while last year’s hike was 12.5% at a time when inflation of general goods and services was 4%.

If VHI imposes a 10% rise for renewals from September 1, the average Plan B policy will rise from €55.35 a month to €60.89, an increase of €5.54.

Policyholders on the First Plan Plus scheme would see their premiums rise by €5.35 a month to €53.50 if the average 10% was agreed by the minister.

Once notified of the planned rise, the minister has a month in which she can reject the proposal but previous double-digit rises have been agreed by the Government.

Yesterday the Consumers’ Association of Ireland (CAI) said families were now paying about €1,200 a year for private health cover in addition to Pay-Related Social Insurance (PRSI), which includes contributions to healthcare.

“With interest rates increasing, the economy slowing down and wage increases slowing down, people are starting to look at the optional extras in their budget,” said CAI chairman Michael Kilcoyne.

“Health insurance is very important but at the end of the day it’s an optionalextra as PRSI includes a health contribution as well.”