Levy to ‘force’ health cost rise

THE EU Commission has given the green light to an alternative risk equalisation scheme in the health insurance sector that one company claims will increase the cost of a family premium by €426 per annum.

The scheme has been described as very similar to the previous risk equalisation initiative that was annulled by the Supreme Court.

Insurers cannot risk-rate their policies, which in turn can result in imbalances on the market if their risk profiles are different.

To address this problem, the scheme introduces tax relief for individuals, the amount of which increases with age. The relief is paid directly to the insurer.

Competition Commissioner Nellie Kroes said the Commission supports aid in the form of “justified and proportional compensation linked to the performance of public services”.

While the VHI welcomed the EU decision, Hibernian Aviva Health criticised it.

The implementation of the levy in its current form was unnecessarily forcing higher premiums on health insurance customers, Hibernian Aviva stated.

The scheme was designed only to preserve the market dominance of VHI, the company added.

“If this levy is implemented in its current form it means a family of two adults and two children would pay €426 extra per annum in health insurance levies. This amounts to an increase of approximately 24% on the health insurance premium that a family pays if insured with Hibernian Aviva Health.”

The VHI said the Government’s proposed scheme was designed to protect community rating.

The scheme, retrospective to January 1, was “an important first step in ensuring that the current system of community rating continues and that older people can continue to access private health insurance”.