Friday 22 February 2019

Fury over huge hike in health cover costs

Eilish O'Regan and Senan Molony

MASSIVE hikes in the price of health insurance for two million customers sparked outrage last night.

Families with a standard VHI plan face paying an extra €490 a year from January, while those with similar cover in Quinn-healthcare will pay €280 more.

The unprecedented premium increases triggered warnings from patient and consumer groups that hard-pressed households would have no option but to abandon private health insurance.

"These massive increases will be the death knell for people already struggling to pay their bills. They will have no choice but to take their chances in the public health system," warned Michael Kilcoyne, chairman of the Consumers' Association.

VHI announced an average price rise of 23pc but it will be as high as 24.6pc for Plan B and 24.9pc for Plan B Options customers, who account for 900,000 of VHI's 1.5 million members.

The rise comes despite a €35m injection to the VHI through extra tax relief to customers aged over 50. VHI chief executive Jimmy Tolan said the company would not be passing on the cost of the €160 levy per adult and €53 for every child on their books which Health Minister Mary Harney introduced to fund those extra reliefs.

But this is because the State-owned insurer is now generating more income in tax relief from its older subscribers than it is paying out in the levy.

He claimed there were other pressures behind the increases, including new expensive treatments that were pushing up costs. VHI had also suffered a loss in its investment portfolio of €30m, he said.

The change means a family of two adults and two children on Plan B will suffer a premium rise of €442.84 to €2,256. A family on Plan B Options will pay an extra €490 on the premium.

Quinn-healthcare, which has 490,000 members, warned it had no choice but to add 8pc to an average premium rise of 16pc as a result of the Government levy, which will cost it €60m.

Chief executive Colin Morgan said €30m of this would be offset by the income it will receive from the higher tax reliefs for its older customers but it was not able to absorb the entire financial hit.

He said the company tried to keep price rises for the cheapest plans at 10pc but the more expensive products will be 19pc dearer from January.

"Before the new levy we were planning an average price rise of 8pc to reflect the increased costs of providing health cover, with a 20pc rise in the cost of private beds in public hospitals a significant driver", he said.

Hibernian Health said yesterday it will not be increasing its prices at this stage but warned about the impact of the levy saying it was extreme, unwarranted and state aid for the VHI.


Condemning the rises, Stephen McMahon of the Irish Patients Association also warned they would be a tipping point for many people struggling to meet bills at a time of unemployment and shorter working hours.

"It's a different world we live in now -- once people could scrub floors to pay their insurance but that work is not available now," he warned.

Minister Harney insisted if she did not introduce the tax reliefs for older people funded by levies, older subscriber risked faced exorbitant premiums.

Mr Tolan said he believed the premiums would not push people over the edge and although the rate of new business for the VHI had slowed he predicted people would still try to prioritise health insurance as much as possible. "We realise tough decisions have to be made by people", he added.

VHI is now paying out €750,000 more each week in claims than it is receiving in income and this was unsustainable, he said.


The biggest hikes will be felt by people in the most deluxe VHI plans -- 30.1pc for Plan D and 29.7pc on Plan E. The vast majority of its customers over 50 are in Plan B, but a significant number trade up as they get older.

He said the biggest driver was the increase in demand for medical care and it is funding new and complex treatments for customers needing cancer, cardiac or orthopaedic care.

Medical director Dr Bernadette Carr said fewer of its members were now having heart by-passes but these had been replaced by a rise in less invasive but more expensive treatments.

Mr Tolan could not rule out similar increases in the future, saying insurers would have to respond if medical inflation continued at its current pace.

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