VHI premiums - Many factorsto blame for price hike

Voluntary Health Insurance (VHI) premiums, which have more than doubled since 1999, are due to go up by a further 12.5% in September, after the company announced losses of €32 million for last year.

The State-owned insurer, which had a surplus of €3.9m in 2004, attributed the losses to the absence of risk equalisation in the community-rated health insurance market.

Health Minister and Tánaiste Mary Harney had announced that risk equalisation would be activated at the start of this year. This system would compel competing health insurers to compensate the VHI for its greater number of older and more expensive customers.

VHI has over 90% of the insured people over 70 years of age on its books. BUPA Ireland challenged the minister’s actions in the High Court, and its decision is still pending.

While a VHI spokesman attributed its losses to the absence of risk equalisation, there was also a 20% rise in costs, with the development of new and more expensive drugs, as well as improved technological developments. In short, better health care is more expensive.

Various factors contribute to the cost of health care. These are inevitably passed on to consumers in the form of higher insurance premiums.

The factors include the profligate waste of the Health Service Executive as well as extravagant bonuses that have been paid without relation to any increased productivity or reduction in the waste.