Insurance costs will not fall with sale of VHI

THE sale of the VHI is not likely to drive the price of health insurance down in the forseeable future, it has been warned.

Dermot Goode, head of insurance consulting firm HealthInsuranceSavings.ie, said while the Government’s announcement was “good news” it would not lower prices in the short term.

Mr Goode advised people to continue shopping around and that for the moment it was business as usual.

“The price of health insurance depends on so many other things outside the industry,” he said.

“If we see health costs, hospitals charges and levies remaining, then the price of insurance will not go down.

“Aviva and Quinn have both been increasing their rates and they have attributed this directly to the health levy.”

Mr Goode said the move was, on the whole, positive but was still a “hugely complex” issue and would be a challenge for the Government to get it right.

“Something had to be done. Competition did not exist in the market, and in effect, the state was the club owner and the referee.

“Costs are going up and members are leaving. The VHI is losing money hand over fist. It has an older book of members but is not being allowed to compete,” he said.

Mr Goode said there had been rumblings in the industry for some time that something was coming down the tracks.

He said the situation in VHI was “unsustainable” as it was haemorrhaging members and although it was doing what it could to stay competitive it was seriously constrained.

Mr Goode said the Government had a “significant task” ahead trying to sell the VHI and it was impossible to say how it would end up – as one company or broken into smaller entities.

But he stressed that patients should not be worried because there was a clear commitment from the Government that the elderly and the sick would be protected.

Head of the Irish Patients Association Stephen McMahon said the move was “good news” and the right thing to try and stabilise the insurance market.

Mr McMahon said over the coming weeks there would be three consultative papers, one of which would look at the minimum benefits insurers would have to give to new members.

Mr McMahon said one of the things being looked at was moving the focus of insurance towards a more proactive approach.

“There will be an emphasis on protocols to take a proactive approach to chronic illnesses with a view to early intervention. At the moment, insurance is built around the hospital setting. There will be a move to change this to the community.”

Mr McMahon said the announcement was “long overdue” and now the elderly would not have to worry about surrendering health insurance because they could not afford it anymore.