Health insurance - Latest VHI hike difficult to justify

Health insurance seems to be umbilically linked with constantly increasing costs as far as members of the Voluntary Health Insurance are concerned.

The autumn will bring hiked-up fees again for more than 1.5 million VHI members as premiums for its hospital A to E plans increase by 3.8% and option plans will go up by 2.5%.

The history of VHI price increases is like an ever-rising graph. The latest hike, which will be introduced in September, brings the cumulative increase in subscriptions to more than 30% since the general election in 2002. It follows increases of 18% in September 2002 and 8.4% in September 2003.

What will focus people’s attention, and prompt valid questions, is that the latest increase was given the nod by Health Minister Mícheál Martin at a time when the company is expected to shortly announce a surplus of €62 million for the year ended last February.

That represents a virtual doubling of its margin in one year, having had a surplus of €34 million in the previous 12 months.

By any measure, that is a very comfortable cushion for the State health insurer and it is legitimate to query why it wants this latest increase.

Certainly, its customers will resent having to dig deeper for a range of services from a company that has an incredibly healthy balance sheet.

The leap in charges is one that VHI customers will find very difficult to understand, especially as the company enjoyed such a huge a surplus in the last 12 months.

Obviously, the State-owned company has the support of the Minister for Health, who has decided not to invoke his right to veto the increase, the third one in as many years.

It is irrelevant to VHI customers to be informed by a spokesman that their charges are considerably less than in Britain, the United States or some other European countries, or that they may actually be the lowest in the world.

The fact is, the insurance company appears to have carte blanche, insofar as the Government is concerned, in deciding to increase its charges.

Only once did the minister intervene to deny the VHI an increase, so it is hardly surprising that in the space of three years premiums have spiralled by 42%.

The VHI has recently justified its latest application on the grounds that it is significantly less than previous years and is also considerably less than the rate of increase in the cost of medical care, which is running at more than 10% per annum.

Also, the revenue generated by the latest increases would only be used to finance new benefits and services such as coverage at a new private hospital in Galway and enhanced maternity and MRI benefits.

Despite that, the opposition parties have been critical of this latest increase and the ease with which the minister seems to accept the case put forward by the VHI.

Some quarters suspect that privatisation of the insurer could be on an agenda in the longer term, especially given that already there is a bill to change the corporate status of VHI.