Hike in health insurance levy ‘bad news’ for consumers

Government plans to hike health insurance levies by 10% is “bad news” for consumers, a health insurance expert has warned.

Hike in health insurance levy ‘bad news’ for consumers

“Just when you thought it couldn’t get any worse for consumers, it has,” said Dermot Goode of www.totalhealthcover.ie

It emerged yesterday that the Department of Health has written to insurance companies about the 10% levy rise that comes into effect next April.

Health Minister Simon Harris urged insurers to “think carefully” before passing on the insurance levy to consumers.

But Mr Goode said the announcement came as a huge blow.

It was not just a levy on insurers, he said; it was a levy on private health insurance customers.

“As with any levy, the health insurers will have no choice but to pass it on to consumers in the form of higher premiums, which means another round of price hikes for hard-pressed consumers.

“All of this on the back of increases of up to 10% on typical premiums over the course of the last six months,” he said.

The minister confirmed yesterday that he would bring legislation through the Oireachtas shortly, probably next week, that would reflect the independent recommendation of the Health Insurance Authority.

“I would urge the insurance companies not to feel it is obligatory to pass on that increase,” he said.

Mr Harris said there was a policy framework in place about risk equalisation so that everyone, including older people, could continue to access health insurance.

Risk equalisation is a process that aims to equitably neutralise differences in insurers’ costs that arise due to variations in the age profile of their members.

Mr Goode said he was surprised at the minister’s comments.

Every time there had been a significant increase in the levy, insurance companies had passed it on.

He warned that the health levy increase would lead to more downgrading of cover and cancellation of policies, with more consumers forced back into a public system that could not cope with current volumes.

Such measures, together with public hospital charges, would stifle competition and discourage new entrants coming onto the market, resulting in less choice and, ultimately, higher prices for consumers.

Mr Goode said that in many cases, the levy already accounted for around 30% of the overall premium.

On some lower-cost plans, he noted, it may account for over 50% of the cost to consumers.

The levy was introduced in 2009 and increased by 149% for adults and 155% for children in the six years to 2015.

Currently, there are two levy rates for adults, of €202 and €403, and two for children — €67 and €134.

The rate applied is dependent on the level of insurance cover purchased, with those on more advanced policies paying the higher levy.

Mr Goode said the levy had played a big part in pushing up premiums in recent years and seemed to be at odds with the Government’s wish that more people, especially young people, would take out private health cover.

VHI, which has the largest share of older and sicker customers, welcomed plans to increase the levy, describing it as another step in the right direction.

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