From May 1, VHI customers can expect to pay, on average, 2% more across 51 of 73 health plans. Just last November, its customers were hit with an average 3% hike in the cost of premiums.
VHI is following on the heels of Laya Healthcare, which last month announced an average price hike of 5.9% across 124 of its 129 plans from April 1.
Dermot Goode, an independent expert on healthcare benefits, said the latest VHI hike will add between €50 and €150 per annum to the cost of family plans.
Moreover, customers could expect more of the same, he said, adding that “creeping price hikes are here to stay”.
“The days of having one big increase are gone,” said Mr Goode. “What insurers are doing now is looking at their claims cost on an almost day-to-day basis. They have to because they are required to have a minimum reserve and they have to operate prudently.”
However one key driver, flagged repeatedly by health insurers, is the public bed redesignation charges, whereby people with private insurance who stay in public beds are charged up to €813 per night, 10 times more than a public patient.
Mr Goode said patients were being asked to sign a waiver which allows the hospital to admit them as a private rather than a public patient. The upshot was insurers were charged by the hospital even though there was no private benefit to the patient. Ultimately, it was pushing up the cost of premiums. Last week, Health Minister Simon Harris acknowledged this was a problem and said he has asked the Department of Health to review the policy, which is underpinned by legislation.
Mr Goode said hospitals’ behaviour vis-a-vis the bed charges was “out of control”.
“There is no code of practice. It is driving up the cost of premiums with no return to the customer, ” he said.
Laya Healthcare blamed the bed charges as the main factor driving its hikes, saying the bed charges cost insurers €200m a year.
In his 2013 report on The Future of Private Health Insurance, economist Colm McCarthy said the then proposed public bed redesignation would add “about 13% directly to premiums on a full-year basis”.
VHI, which has about 1m customers, said its latest hike was necessary “to cover the costs of new technologies, new drugs, and new procedures, as well as rising claims costs in public hospitals”.
Declan Moran, the director of marketing and business development, said they had “worked hard to keep the price increase as low as possible but need to ensure that our plans continue to deliver new and innovative benefits to our customer”.
Mr Goode said he would be surprised if the third private health insurer, Irish Life Health, did not also raise its premiums.
As an example of the kind of hikes people can expect from May 1, those with a One Plan Family (2 adults and 2 children) will pay an extra €7.06 a month, c€85 extra per annum. In addition, the government health levy is set to increase from April 1, from €403 to €444 per adult and from €134 to €144 per child.