PRIVATE health insurance costs could jump by 45pc next year if proposed new charges are introduced in one go, the VHI has warned the Government.
The State-owned insurer said consumers would pay much higher odds than the 10-15pc originally flagged by the four private health insurers.
The move comes as the Minister for Health James Reilly plans to impose charges next year on private patients using public beds.
Dr Reilly has already agreed to postpone the introduction of the charges until next year. The move was made in return for an agreement by health insurers to make an advance payment on costs due next year.
But the proposal will lump a significant financial cost on the insurance companies in just one year.
This would ultimately cause subscribers to cancel policies and a "downgrading spiral" as people move to cheaper health insurance, according to internal documents.
The VHI said that a minimum of a 45pc rise would be needed if the company were obliged to cover the entire additional charge through pricing, while at the same time maintaining current solvency levels.
The insurer said that if it were allowed to introduce it on a phased basis and a "co-payment" system for subscribers for some procedures it could raise 50pc of the sum.
Prices would rise by just 13pc in one year if the company is asked to absorb the price in one year -- but this equates to 22pc when "normal healthcare inflation" is included, the VHI said.
Up to €80m would be raised through cutting the number of public hospital beds covered and a further €40m through changes to member cover.
The VHI said that if it were allowed to take five years to absorb the charge, it could limit the price increase to 2pc per year or 10pc when normal healthcare inflation is taken into account.
Over 134,000 consumers have cancelled their health insurance over the past three years, which has had a knock-on effect on the price of those who retained the insurance.
The documents, seen by the Irish Times, predict that another 120,000 people will leave the market over the next two years.
But this figure could rise to 180,000 people leaving if the "accelerated implementation" of the charge is spread out over one or two years.
Health insurers will face deficits as the €250m charge is payable before changes accrue.
The VHI said that it would be on unsteady ground and would find it difficult to present a sustainable plan to the Central Bank in such circumstances.