Private health cover to increase by 30%

Private health cover is set to cost 25% to 30% more in the next two years, adding to the pain for customers whose premiums have already doubled since 2007.

Insurer Aviva issued the warning after commissioning a report by UCD economist Colm McCarthy, which concluded that the combination of recession and unhelpful Government policy was threatening the future of the “fragile and contracting” private health insurance industry.

Mr McCarthy said this jeopardised the Government’s proposal for a system of universal health insurance, which is pencilled in to be in place by 2016.

His report showed the proportion of the population covered by private health insurance had fallen from 51% to 46% in the four years to December, and he predicted it would drop to 40% within a few years.

Younger members were giving up cover or declining to take up cover in far greater numbers than older customers so that, for every member aged over 60, there were now just 1.54 members aged 18 to 39.

The imbalance was unsustainable, given that older members cost eight times more in claims yet all members paid the same.

Mr McCarthy said this trend would naturally push up premiums for all members, but said the Government’s policy was a major factor in rising prices. Plans to start charging private patients for the use of public hospital beds this summer would add 13% to current premium prices, he said.

Tánaiste Eamon Gilmore last week rejected similar claims made by Fianna Fáil, saying they were exaggerating. However, Mr McCarthy said it was clear that insurers would have to make significant increases to premia to meet the additional costs of the new policy.

“It’s being superimposed on a market that is under stress and on a market where break-even premiums are going to rise annually so there is a risk that by the time we come around to bringing in universal health insurance, the gap to be bridged [between people with private cover and those needing the State to pay for their cover] will be bigger and bigger,” he said.

Apart from the impact of the new charges, Mr McCarthy said the main contributor to rising premiums was excessive healthcare costs caused by having too many hospitals, paying too much for drugs, and maintaining too high salaries.

Aviva Health CEO Alison Burns warned that the defection of members from private cover put additional burden on an already strained public system. “You cannot look at one side in isolation. The two sectors are inextricably linked.”

Cost compare

Plans for two adults and two children

*VHI Plan B, 2007 — €1,813

*VHI Health Plus Access, 2013 — €3,769

*Quinn Essential Plus 2007 — €1,422

*Laya Essential Plus 2013 — €2,796