Threatened VHI hike will see premiums up 120%

VHI customers will have suffered a massive 120% increase in their health insurance cost since the start of the recession if the insurer imposes a threatened 50% budget-induced price rise.

Since early 2009, the cost of coverage from all health insurers has surged upwards for a variety of reasons including medical inflation, dwindling customer numbers and the Government’s €205 adult and €66 child annual health insurance levy.

All three of the companies offering services in the Irish health insurance market have been involved in this price rise.

However, due to its customer base neither Aviva Health Insurance or Quinn Healthcare’s increases compare to the VHI rise — which is now set for a fourth attack on customers’ pockets in just under three years in order to balance its books.

In early 2009 VHI hiked premium prices by 23%, followed by a 15-45% jump in November 2010, depending on the policy an individual held.

Last month the company again increased costs 2%, before Monday’s post-budget announcement that coverage costs may increase by another 50% due to Government plans to abolish a subsidy for private medical treatment in public hospitals.

While Health Minister James Reilly said yesterday that the proposed rise is entirely unreasonable, a VHI spokesperson told the Irish Examiner there is no other way the company can cover its costs other than ending treatment coverage at certain hospitals.

As VHI can only increase premiums on a renewal basis, the spokesperson estimated it would take two years to fully introduce the latest proposed measure.

She added that the mooted 50% rise is based on the Government view that half of all emergency department admissions are private patients, which means insurance firms have to find an extra €320 million to cover the cost that the Cabinet believes is their responsibility.

Representatives of VHI, Aviva Health Insurance and Quinn Healthcare are due to meet with Dr Reilly within a fortnight to discuss the details further, following a preliminary meeting with the Department of Health’s secretary general, Michael Scanlan, on Monday.

However, considering the recent premium cost rises of VHI’s two rivals, it is unlikely more favourable options for customers will be on the agenda from other firms.

Since April last year Aviva has imposed a €40 charge on customers and a 14% rise in March this year in order to balance its books.

It confirmed Monday’s budget announcement will almost certainly lead to an increase in its premium charges further.

Similarly, Quinn Healthcare — which rose prices by 10% in January 2010, 7.9% in January 2011 and 6% in April this year — announced a 12% rise late last month which will come into effect on New Year’s Day.

More than 43,000 people cancelled their health insurance coverage in the first half of this year. It is expected to surpass 75,000 by December 31 — making the 2011 cancellations equal to the combined totals for 2009 and 2010.

Irish Patients Association chairman Stephen McMahon said the clear risk is that people already struggling to pay their bills will no longer be able to afford health insurance — heaping further pressure on an already overworked public system.