THE VHI has insisted its latest price increases of up to €180 for an individual are unavoidable and claims to have implemented cost savings of more than €100 million over the last three years.
Patient advocacy groups have, however, accused the insurer of a lack of transparency and warned the price increases will drive thousands more out of the market.
The VHI’s One+ Plan is its fastest growing policy with 11 per cent of the company’s 1.3 million members opting for it. The cost will increase by 6 per cent from March 17th and the price for an adult will rise from €828 to €893.40 per year. The price for a family of four will climb from €2,093 to €2,250, an increase of €157 each year. The VHI’s Parents and Kids plan is going up by 9 per cent from the middle of March, which will see the price for a family policy increase from €2,540 to €2,821.
The VHI insisted it had no choice but to impose the increases and said the average claims cost per customer had increased by 15 per cent since 2009. It said it was currently €980 per patient, compared with €851 three years ago.
It also blamed the increases on costly medical innovations. It welcomed medical advances which have contributed to more positive health outcomes for sick people, particularly those with cancer and heart conditions, but said they had “an impact on the cost of care and are a significant driver for increased private health insurance premiums each year”. Anticipating criticism of how the company is managing its business, chief executive Declan Moran claimed that in the last three years the VHI had “focused on bringing costs down significantly”.
He said that following “tough negotiations with providers, combined with a firm focus on the reduction of administration costs and the introduction of increased efficiencies right across the business, we have made savings of over €190 million since 2009.
“We continue to be the most efficient health insurer in the market with administration costs of less than 7 per cent of premium income.”
Stephen McMahon of the Irish Patients’ Association expressed dismay at the increases and said they were higher than he had anticipated. “The problem is that VHI premiums are going up by multiples of inflation and that is very hard for people to understand. I can’t see how the increases have come about and I think the company needs to be more transparent.”
Mr McMahon expressed concern that many people would be forced to leave the market, while others would be left without any option but to downscale their policies, which would leave them without cover for many conditions.
About 6,000 people cancelled health insurance policies each month last year and, according to recent research from the Irish League of Credit Unions, the numbers who will jettison health insurance will rise this year. It found that 9 per cent of those polled said they would probably have to discontinue their policies this year, while more than 30 per cent said they would have to seriously consider it if prices increased in 2012.
“This increase is going to have a huge impact on hard-pressed consumers who want to remain on these VHI plans,” said health insurance consultant Dermot Goode.
“Many will now be forced to reduce their cover and opt for lower level plans. Ultimately, this hike will lead to a further exodus from private health insurance, which will have severe consequences for the overall market,” he warned.
It is just the latest in a long line of price increases across the sector over the last year. Aviva Health plans are to go up by 15 per cent next month. The company upped its prices by 14 per cent in March and by a further 9 per cent last August. Quinn Healthcare also announced its intention to increase the cost of premiums by 6 per cent, its second price rise in less than two months.