MINISTER FOR Health Mary Harney has said she is "very concerned" at the significant increases in the cost of health insurance cover announced by the two leading companies in the Irish market yesterday.
About two million people covered by Quinn Healthcare and the VHI face rises of between 16 and 23 per cent on average in their subscriptions from early next year.
Ms Harney said yesterday that the rises would represent "a major burden for many families".
However, the Minister said the VHI had absorbed the cost of the new €160 levy on all subscribers introduced by the Government to offset the cost of €300 million in additional tax relief provided to older health insurance subscribers.
Ms Harney said that if the levy had not been introduced in recent weeks, the cost of health insurance premiums "would increase fourfold" for many older people.
The 23 per cent increase on average in VHI prices will see the cost of its popular Plan B scheme for an adult rise by €163.34 - from €664.66 to €828. The cost for a family on Plan B will increase by €442.82 to €2,256 for two adults and two children.
The cost of Quinn Healthcare's "essential plus" starter product will rise from €1,248 to €1,388 for two adults and two children. The other main health insurance company in the Irish market, Hibernian Health, said it had no plans to increase its premiums at this time. The VHI will not have to seek approval from the Minister for Health to introduce the new increases as was the case previously.
Under legislation introduced by Ms Harney last year, the company can set its own price levels. VHI said the increases were required to allow it to fund the needs of its 1.5 million subscribers.
It said it had paid out €30 million more in claims than it had received in premium income. It said it had also lost €30 million on its investment portfolio. VHI chief executive Jimmy Tolan also attributed some of the increase to the Government decision to increase private bed charges in public hospitals by 20 per cent, in addition to rising costs in private hospitals and consultants' charges. He said the company had not passed on the cost of the new Government levy.
Mr Tolan said he did not expect subscribers to be priced out of the market as a result of the increases.
However, Quinn Healthcare said its increases were "mainly due" to the new Government levy and the 20 per cent rise in private bed charges. "Before the announcement of the new health insurance levy, we were planning an average price increase of 8 per cent to reflect the increased costs of providing health cover, with the 20 per cent increase in public hospital beds being a significant driver of this.
"The new levy amounts to 12 per cent of premium for us and, while we are bearing some of the impact, we have no option but to increase our prices by 8 per cent more than what we would have otherwise done," it said.