VHI: Older clients will pay more

THE country’s largest private health insurance provider has warned that older customers will end up paying more for their healthcare unless a new “robust mechanism” is introduced to overhaul the health insurance sector.

The stark warning came as the VHI announced an across the board 8% increase in membership fees from next month which could see a typical family of four paying €15 a month more for their VHI cover.

In announcing the price increase, which will see the cost of policies rise by between 6% and 9.5%, VHI chief executive Jimmy Tolan said that the VHI had lost 120,000 customers last year, with some transferring to competitors, including Hibernian Aviva and Quinn Healthcare.

He said other customers, particularly in the latter half of last year, are suspected of simply giving up health insurance altogether because they felt they can no longer afford it.

Mr Tolan said the current Community Rating system was only 40% effective, resulting in older customers proving “significantly loss-making” compared with younger customers and putting VHI, with its greater number of older customers, at a disadvantage.

VHI, which has 1.5m customers, lost more than €170m last year and said it expects to make greater losses this year.

“If pricing comes down for younger customers, because of the marketplace, then the net consequence of that for the marketplace is that pricing must rise for older members. My hope is that a robust mechanism is put in place,” he added.

Jim Dowdall, chief executive of Aviva, said the current risk equalisation system was not working and that the levy – which he said meant Quinn and Aviva subsidising the VHI – needed to be scrapped.

“We need to stop protectionist policies as they have never been proven to work,” Mr Dowdall said, adding that Aviva has “no intention” of raising its own prices this year, following a price increase last October.

He said VHI’s complaints about its older client base was “a fudge” and that its losses were primarily down to management actions.

Yesterday’s VHI price increase does not relate to its company schemes, but a spokesperson said an announcement on a March increase for those plans was imminent.

Labour’s health spokeswoman Jan O’Sullivan TD said the VHI price rise would impact heavily on many people, particularly public sector workers who have been hit by pay cuts.

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