VHI bids to spread levy pain to rivals
Published 15/04/2011 | 05:00
Jimmy Tolan: €400,000 pay package
STATE-owned insurer VHI is seeking a huge hike in the annual levy imposed by the Government on each healthcare policy.
The proposal to hike the levy by 44pc would mean increases of €90 a year on premiums for those with health insurance from rivals Quinn and Aviva.
Some 780,000 people have health insurance with these two companies.
But the premiums for adult members of VHI would fall by €90 a year if VHI got its way.
The levy is currently €205 per adult and is imposed to compensate VHI for the fact that has more older members than its competitors.
But VHI wants the levy, which is also known as an age-related tax relief at source, hiked to €295 per adult.
Revenue from the levy is used to pay for a tax relief scheme aimed at subsidising health insurance costs for people over the age of 60.
The tax relief is applied before people pay their premiums, which means people of different ages pay the same amount for the same plan.
VHI boss Jimmy Tolan accused his competitors Quinn and Aviva of cherry picking younger customers and leaving his company with the majority of older customers.
The company has 129,000 customers over the age of 70, while its competitors have a majority of young customers.
Mr Tolan refused to rule out further premium hikes for the insurer's 1.3 million customers, but he said rises of the scale announced earlier this year were unlikely.
Premiums on Plan B Options rose by 45pc in February, with Plan B going up 35pc. Other plans rose 15pc to 21pc.
Speaking at the launch of VHI's annual results, Mr Tolan also revealed that his basic salary is €297,000 a year.
Other benefits, such as pensions contributions, take his total pay packet to €400,000.
He claimed he is earning 40pc less than he agreed when he took up the job.
The healthcare group dramatically cut its losses last year from €42m in 2009 to €3.1m.
"We still have to improve our annual performance by €60m in order to fund our customers' healthcare needs and also to meet the requirements of the Central Bank and European Commission," said Mr Tolan.
He said an 21pc rise in the cost of private beds in public hospitals and changes to the levy on every healthcare policy would have to be overcome this year.
The group has imposed a pay freeze on staff and generated annualised savings of €100m.
VHI said the Government's healthcare strategy is the most ambitious and radical in the history of the State and it hopes to play a significant role.