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Sickened over health cover

OUR health insurers are rapidly becoming as unpopular with the public as the country's banks. The latest cause of ire is the decision by Aviva to impose across-the-board price increases of 14pc, despite the company reassuring the public just three weeks ago that such a move wasn't on the agenda.

The move followed crippling price increases of up to 45pc announced by VHI, the country's largest health insurer, earlier this month. Most observers expect the third player in the market, Quinn Healthcare, to raise prices soon also.

These moves fuel public anger for three reasons. One is the sheer scale of the rise when general inflation is running at a puny 1.3pc.

Secondly, the announcements tend to come wrapped in PR spin, with the companies blaming everyone but themselves for the increases.

Thirdly, the average consumer is left hopelessly confused by the different plans, packages and entitlements on offer from the three companies. Confusion ironically makes consumers less likely to switch and just causes inertia in the market.

What the consumer needs on the back of these outrageous increases is a simple system to compare the different plans of the three companies. The service should be provided by an independent entity with some experience of demystifying complex financial offerings and hopefully directing ordinary customers toward the right plan for them.

While the companies themselves must take the majority of the blame for the hikes -- they are failing to control their own costs, after all -- successive governments have left us with a dysfunctional health insurance market.

The State's role is complicated by the fact that it owns VHI, while the State is also the ultimate policymaker and regulator for the sector. Such an arrangement is unhealthy and militates against a fully competitive market.

While for years there has been talk of privatising VHI, it hasn't happened despite fine ministerial words. Even selling that company might not solve any of the ills, particularly when medical inflation in Ireland is running at 9pc and the State itself drives up the costs with a health insurance levy.

Clearly there is something seriously wrong with the provision of medical care at the hospital level and until that is changed any cost relief for customers is likely to be elusive. The State can no longer accept the cost of private beds in public hospitals rising by 21pc, when the rest of the economy is either contracting or just barely expanding.

While healthcare is always going to be different to other services, some economic discipline must surely come into play.

A few years ago we all naively thought such discipline would come from the entry into the market of hard-nosed and efficient private companies like Aviva and Quinn. But the recent increases from that sector suggest that these companies are no longer keeping the VHI truly on its toes.

Irish Independent