Health insurers warned to ‘deal realistically with costs’

The country’s four health insurance providers have been told by the Minister to start slashing costs or else watch their customer numbers collapse.

Responding to the health providers’ warning that premiums will rise by up to 30% if private customers have to pay the full cost of a public bed in a public hospital, Health Minister James Reilly said the health insurers “must come to the table and deal realistically with costs”.

“I don’t personally think there should be any increase in insurance premiums because of the massive amounts of increases over the past number of years,” he said on RTÉ television.

Under the new plans, insurers could be charged as much as €1,000 if one of their members stays the night in a public hospital bed.

Last Friday, the Irish Health Insurance Council warned that the changes proposed in the Health Amendment Bill could cause serious damage to an “already fragile and contracting market”.

It said the “best opportunity” the Government had to raise the necessary funds “was to engage with the private health insurers to implement a number of sustainable cost reduction initiatives”.

Yesterday, the Independent Hospitals Association warned that it too is seriously concerned with the Government’s proposals and said independent hospitals will face closure if they go ahead as planned.

Fianna Fáil’s health spokesman, Billy Kelleher, said it shouldn’t take a row with the minister to make health insurers focus on costs.

“They should be doing it anyway. As for the charging patients fully for the public beds, it will mean that more and more people will pull out of the health insurance market and the State can’t afford that, as the public health service needs the income stream from the private patients and also won’t be able to absorb all the new people looking for public treatment,” he said.

“This move, which is just a way of increasing income in the short term, will just cause a further costly contraction.”

Speaking at an Oireachtas health committee last month, Mr Reilly again raised the issue of health insurers’ cost base asking VHI to explain why it pays 80% of all private claims, even though it only has 50% of the customer base.

He also questioned why procedures that now take 20 minutes still cost what they did when they took two hours.

A report by economist Colm McCarthy, predicted the market could shrink by 40% in the coming years if premiums continued to rise. The Government needed to take a longer- term approach rather than “patching up a cash hole”.

Some 85% of customers say they would give up their health insurance if premiums rise by 30%, according to a survey carried out for Aviva which commissioned Mr McCarthy’s study.