Tuesday 24 October 2017

Q&A

Charlie Weston

Charlie Weston

THE rise in the levy imposed on all health insurance policies is set to add to the cost of cover from March.

The levy is designed to ensure that everyone pays the same price for the same level of cover, regardless of age or health status.

Q Will this higher levy be passed on to families?

Health Minister James Reilly called on insurers to absorb the extra cost instead of passing it on to consumers.

But the second-largest private health insurer, Laya, said it was not possible to avoid passing on increase in the levy to customers.

And Aviva and Laya are expected to pass on what they regard as an extra cost imposed on them.

Q I am a VHI customer. What impact will this rise in the levy have on me?

That's complicated. State-owned VHI has welcomed the rise in the levy. It will also face the biggest bill as the levy is paid by insurers on the basis of the number of customers they have and the VHI has the lion's share of the market.

However, the insurer will also be the biggest beneficiary of the levy as it has more older customers than the other three players.

A spokeswoman for the company insisted yesterday that it does not intend to pass on the higher levy to its customers.

But insurance experts have cast doubt over that claim.

One way or the other, there will be more healthcare hikes in the coming months.

The VHI will be increasing premiums – it may just not blame the levy for that.

Q Why are there so many rises in health insurance premiums?

Some insurers have had two increases every year recently. There are a number of reasons.

A higher levy being imposed by Health Minister James Reilly is pushing up the cost of cover.

Fewer young people are taking out policies. And most of the 250,000 who have left the market since 2008 are young people, who are cheaper to insure as they make fewer claims.

So the "greying" of the customer base of health insurers means higher claims.

Medical inflation is running at between 9pc and 10pc a year, at a time when price rises generally are mooted.

This is due to the high cost of medicines, the high earnings of medical specialists and the expensive of new medical equipment.

The changes to tax reliefs for health cover in last month's Budget have also led to premium rises of between €40 and €800 per policy.

There are also higher charges being imposed by the Government for the use of private beds in public hospitals for those with medical insurance.

Irish Independent

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