Vhi warns of potential premium increases of more than 50%

Families could see their health insurance premiums soar by €500 on the back of Government plans to make savings in health.

Health Minister James Reilly announced proposals to abolish a subsidy for private medical treatment in public hospitals.

Vhi Healthcare warned it would have to fork out double what it pays for customers in public hospitals – resulting in a premium increase of at least 50%.

Declan Moran, chief executive, said the change would have a profound impact on the private health insurance market and put further pressure on the public system.

“The evidence suggests that the insured population simply cannot afford such an increase,” he said.

“We have no doubt that this will hasten the fall in number of those choosing private health insurance, ultimately increasing the burden on the public health system at a time when it is already under pressure to meet its growing demands.”

Dr Reilly revealed about €800m has to be slashed in next year’s health budget, on top of €800m euro cut in 2011.

Measures to save money include cutting staff levels by up to 3,000, rising the monthly threshold for the Drugs Payments Scheme to €132 a month, maintaining a 50c prescription charge, and securing 2% efficiencies in disability, mental health and children’s services.

Under existing legislation, public hospitals cannot charge private patients who occupy public beds over the 20% officially designated – costing the public hospital system.

Dr Reilly said new legislation would allow public hospitals to increase charges of all private patients in public hospitals – raising €268m a year.

He acknowledged the move would have a significant impact on private health insurance premiums, but believed it would provide much-needed extra income for the public hospitals.

“The new system is fairer and entirely in keeping with the charges required along the road to universal health insurance,” he said.

“Removing this subsidy to private patients will help to protect services for public patients.”