VHI price rise means more misery for consumers

The VHI was anxious to get out the message that its latest round of price increases will add around 3 per cent to the average cost of health insurance premiums but that figure masks the impact successive hikes have had on many of its 1.2 million policy holders.

For a start, the new prices increases again hit older, more vulnerable, customers hardest.

The result is that some of the State’s largest health insurer’s policies - typically those held by older people - will climb by around 6 per cent or over €100 a year. And that is not the whole story.

All told, some of the company’s polices - again typically those held by an older age cohort - have now gone up by over 70 per cent, or over €1,000, in little more than three years.

The most commonly held policy among over 65s, Plan B Options, now costs an average of €2,100 per annum.

Tax changes announced by Minister for Finance Michael Noonan meanwhile have added to the burden with the dramatic cutting of the tax relief adding as much as €800 a year on to the cost of some policies.

Yesterday’s increase is the VHI’s sixth price hike in just over three years. Last January the company increased its prices by an average of six per cent and three months earlier it rolled out increases of 3 per cent.

In March 2012, it increased the cost of its policies by anywhere between 6 per cent and 12.5 per cent and four months earlier it imposed average price increase of 1.9 per cent.

In January 2011 it also upped the cost of its policies, some by as much as 45 per cent.

In addition to the price increases the insurer has also reduced the level of cover it offers under some of its more popular polices including certain orthopaedic and ophthalmic treatments which could leave people facing shortfalls of €4,000 or more on certain operations depending on where they are carried out.

As a result of the seemingly endless price hikes, from the VHI and the other providers in the market place, many consumers have been left with no option but to surrender their policies.

According to the sector's regulator, the Health Insurance Authority, two million people were insured at the end of last September, a decline of 62,000 or 3.2 per cent in a year.

Most worryingly, the number of people aged 18 to 29 years of age with health insurance fell from 241,222 to 217,588, a decline of 10 per cent.

Young, healthy people allow the costs for older, sicker people to be controlled, which is known as intergenerational solidarity.

If the young leave the market, prices will rise even further for older people.

It is not all bleak for the sector and big savings can be made by switching from one provider to another and, according to industry experts, anyone who has not changed provider or policy in the last four years, is almost certainly paying more than they need to.

Despite the ease with which savings can be made and relative simplicity of the switching process less than 30 per cent of consumers have ever done it.

The VHI has made it more difficult for people to switch in recent years - insisting that those who want to leave it in the middle of a year-long contract pay hefty penalties - but anyone coming up to renewal would do well to look at alternatives.