Reilly's budget plan to force 10pc health insurance hike on families
Published 01/12/2011 | 05:00
FAMILIES are facing new increases in health-insurance premiums of up to 10pc from next year as a direct result of next week's Budget, the Irish Independent has learned.
Health Minister James Reilly is set to announce that he will force private insurers to pay up to 31pc more for using beds in public hospitals.
This will have a direct knock-on impact on premiums charged by the VHI, Quinn and Aviva.
Every 10pc rise in the cost of a private bed in public hospitals pushes up premiums by 3pc.
It is understood the Cabinet was told earlier this week by Dr Reilly that he was considering hikes of between 12pc and 31pc in charges imposed by public hospitals on insurers for beds.
The Department of Health charges a daily rate of just over €1,000 for a private bed in a state hospital. For a semi-private bed, the charge is €889.
A rise of 31pc would mean insurers would have to fork out more than €1,300 for each night their customers use a private bed in a public hospital.
Insurers such as the VHI, Aviva and Quinn are not allowed by the Government to negotiate on prices charged by public hospitals, unlike the situation in private hospitals.
Dr Reilly is under pressure to cut millions of euro from the department's €14bn annual budget.
Moves to increase the costs for insurers come just days after both Quinn and VHI announced price hikes.
Price hikes on Quinn Healthcare's Essential Plus plans will mean a family of two adults and two children will end up paying an additional €340 when they renew their policies from January 1.
The VHI imposed a 2pc hike on most premiums last week, on top of rises of between 15pc and 45pc that came into effect last February.
Aviva, which is now the cheapest in the market, is now expected to announce increases in premiums in the spring.
Rising premiums are set to push more people to give up private healthcare. Some 110,000 people have ditched their health cover since 2009, with some 43,000 of those giving up cover in the first half of this year.
Dr Reilly is also considering forcing health insurers to pay up when an insured customer uses a public, rather than a private, bed.
This would generate €370m for the public health system, but runs the risk of destroying the private healthcare market.
Health insurers have argued that this would lead to a massive number of people giving up health insurance, which would lead to huge pressure on the public-health system.