VHI prices rise by nearly 70% in two years

Analysis:Yesterday's price rise is the health insurer's fifth since January 2011

VHI’s latest 6 per cent price increase means the cost of some of the State’s largest health insurer’s policies – typically those held by older people – has risen by close to 70 per cent in little more than two years.

Yesterday’s increase is VHI’s fifth in just over two years. Last November the company increased its prices by up to 3 per cent. Last March it rolled out increases of between 6 per cent and 12.5 per cent. Four months earlier it imposed a price increase of 1.9 per cent on its 1.2 million customers. In January 2011 it also upped the cost of its policies, some by as much as 45 per cent.

It would be unfair to point the finger only at VHI. When it comes to price increases the other insurers have not been found wanting.

Late year Laya Healthcare announced it was imposing general price increases of between 3 and 14 per cent – following at least three other price increases over the previous two years.

Aviva Health increased the price of its plans by between 4 per cent and 7 per cent last October and has imposed a range of other price increases since the start of 2011.

In addition to the price increases there has been a curtailment of cover. VHI has substantially reduced the cover it offers for certain procedures under some popular schemes.

Certain orthopaedic and ophthalmic treatments have been reduced to 80 per cent of the total cost if performed in a private hospital. Changes of this nature could leave people facing shortfalls of €4,000 or more on certain operations.

The companies have also started imposing punitive charges on people looking to cancel policies or switch from provider to provider outside of set renewal periods.

60,000 policies cancelled

More than 60,000 people have cancelled their health insurance policies over the last 12 months, according to the Health Insurance Authority (HIA). It published a report late last year that indicated that 2.109 million people – 46 per cent of the population – had private health insurance, down from a peak of just under 2.3 million towards the end of 2008.

While the HIA does not speculate on the cause of so many people exiting the market, the recession and multiple price rises from all the State’s health insurance providers are clearly at the root of the problem.

While Minister for Health James Reilly blocked a bigger VHI price rise on this occasion, recent trends suggest there are likely to be more price rises later this year.

The financially troubled insurer needs to put itself on an even keel financially to meet strict international solvency levels from which it has been exempt since it was established in 1957.