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Thursday 18 September 2014

Families are facing €200 increase in annual cost of health insurance

Families face premium increase from January

Charlie Weston Personal Finance Editor

Published 01/10/2012 | 05:00

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NEW rules could push up health insurance premiums by as much as €200 for a typical family.

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The regulations are being brought in by the Government to ensure older people don't have to pay more for health coverage.

But insurance companies warn the new "risk-equalisation" measures will spark a fresh round of premium increases.

There is currently a temporary levy of €285 on every adult's health policy, with a €95 charge for children.

The new rules are likely to push that up considerably. Industry experts fear it could be as much as €200 for a family of two adults and two children.

They admit that would be a devastating increase for families and would drive more people out of private insurance into the public system.

Any increases would come on top of a series of recent rises, as health cover costs have gone up five times in two years.

This month, Aviva is due to increase its premiums by up to 7pc, which will cost families an additional €150 a year.

That is expected to spark a new round of rises from VHI, Laya and Glo Health.

Now the Irish Independent has learned that the Department of Health is introducing a new set of levies on health cover from January.

It is part of a formal risk-equalisation scheme to replace the current one. The State has promised the EU it will put a such a scheme in place by the start of next year.

Risk equalisation is a way of ensuring everyone pays the same for health insurance no matter their age and irrespective of the state of their health.

Insurers with the majority of older people get compensated through a levy on all policies for having more aged clients, who make more claims.

Most of the new levy will go to the VHI.

The temporary levy of €285 on every adult's health policy and €95 for children came after Health Minister James Reilly hiked it by 40pc at the start of this year.

In a letter sent by Dr Reilly's department, it is explained that there will be four separate rates for the new levy.

In addition to the two rates for adults and children, there will be separate ones for those whose health insurance covers them for treatment in public hospitals only.

Another rate will apply for those with private hospital plans.

Health insurance experts said this would make it more expensive for insured people to get medical procedures done in private hospitals. Semi-private rooms in public hospitals will also get dearer.

The letter from the Department of Health says the new permanent risk-equalisation scheme and the new levies will apply from the start of next year. But it does not say how much the levies will be.

The current high level of the levies means it already costs a family of two adults and two children around €2,000 a year for health cover.

Notice

The new rules will force health insurers to tell the department what exactly they will cover on their plans.

The department letter states: "A 90-day notice period is required for both new products and for changes to existing products (other than premium changes). Changes to existing products (other than premium changes) will be permitted to take effect only from January 1 of any year, subject to the 90-day notice period."

Insurers said this would mean that once a health insurance plan was submitted for approval they would have to wait a year before offering new procedures and new drugs on the plan. At the moment, insurers only have to give 30 days' notice when changing a plan or introducing a new one.

The new rules would also make it more difficult for insurers to negotiate cost cuts with private hospitals, senior health insurance industry people said.

One senior source said: "This will mean premiums going up. Private hospitals will have the whip hand because the department is imposing deadlines."

Irish Independent

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