Health cover levy hike 'will be passed on to customers'
Published 12/11/2016 | 02:30
Insurers have been called on by Health Minister Simon Harris to resist pushing up the cost of premiums in response to a rise in the levy imposed on all health policies.
Insurers were told by the Health Department that the levy is set to jump by 10pc from April, a move financial experts said would see insurers passing on the costs to consumers.
The levy is imposed on health insurers to ensure that no one pays more than anyone else for the same level of cover, irrespective of age and health status.
The money goes into a pot and is then distributed to insurers with older and sicker policyholders, to ensure premiums are the same for everyone with the same type of cover.
The levy rise comes after the Vhi, Laya and GloHealth all increased premium rates, blaming higher charges in public hospitals imposed by the Government.
From next April, the levy on most adult policies will be €444, a rise of €41 since last year, after a determination made by the Health Insurance Authority.
The rise will now mean the levy will account for half the price of a low-level health plan, which is around €800 a year for an adult.
Dermot Goode, of totalhealthcover.ie, said the move would lead to higher prices from April.
He added that insurers were already planning increases in January, to take account of charges imposed on those with medical cover for using public hospitals.
"This is not just a levy on insurers - it's a levy on private health insurance customers. As with any levy the health insurers will have no choice but to pass it on to consumers in the form of higher premiums, which means another round of price hikes for hard-pressed consumers," Mr Goode said.
"All of this comes on the back of increases of up to 10pc on typical premiums over the course of the last 12 months."
The levy was introduced in 2009.
The latest rise will mean it will have gone up by 180pc, from €160 per adult seven years ago.
Mr Goode claimed younger people who took out health insurance for the first time last year to avoid age-related penalties would now drop their cover.
Mr Harris has now called on insurers to resist passing on the cost of the levy to consumers.
But Mr Goode said this was not going to happen.
"That is naïve. There will be increases. It will be passed on," he said.
In the last few months both Vhi and Laya have imposed average rises on popular plans of 10pc, with GloHealth plans set to go up by an average of 6pc next month.
The Vhi tends to be in favour of the levy as it has the lion's share of older members, but its competitors feel it gives it an unfair advantage.
In a statement, the state-owned insurer said: "This represents another step in the right direction and will help keep health insurance affordable for older and sicker people."
The Vhi added that the levy announcement has increased the support required for older customers, but it said more needs to be done to aid sicker customers by strengthening the health status aspect of the scheme.