Health minister aware of VHI’s price concerns over new charges

Health Minister James Reilly says he is aware of concerns about VHI insurance premiums skyrocketing if new charges are introduced.

VHI has warned the Government that its health insurance premiums could increase by 45% next year unless it is allowed to phase in new charges proposed by Dr Reilly.

A spokesperson for the minister said he was aware of the concerns expressed by the State-owned insurer.

“A decision on this matter will be made as part of the budgetary process,” the spokesperson said yesterday.

According to a newspaper report yesterday, VHI is concerned that Dr Reilly’s plans to charge private patients for using public hospital beds will add more than €200m to the cost of its claims. VHI said it might be forced to introduce a 45% increase in the price of some premiums as a result.

It said other measures, including better savings and changing members’ cover, could make up at least half of the cost of the charge.

The insurer said that if the levy was phased in over five years it could limit the rise in premiums to 2% per annum.

Earlier this month, VHI confirmed it was to increase prices by 2% to 3% across most of its plans from Nov 22.

It said it spent €1,225bn last year meeting customers’ healthcare needs and expected this to increase by a minimum of 6% in 2012.

While it had driven down average claims’ costs for private hospitals and consultant fees, the costs of public hospitals had risen.

Economist Brian Turner of UCC said the minister had said he was going to introduce charges for private patients using public beds in the budget last year.

“If these charges are introduced in one fell swoop, it will result in a very significant increase in insurers’ costs,” he told RTÉ radio.

He said there were a number of ways insurers could respond to that and VHI had suggested using co-payments for those accommodated in hospitals and reducing the number beds they cover.

“One way or another, there will be significant impacts on privately insured people from these charges because they will constitute a very significant proportion of insurers’ costs.”

Dr Turner said the increasing number of younger people leaving the health insurance market was also pushing up premiums.

He suggested lifetime community ratings could counteract the exodus of younger customer from the private health insurance market.

People could be charged more if they leave it later to take out health insurance.

“That was done in Australia in 2000 and it encouraged a huge number of younger people back into the market.”