VHI, Quinn Healthcare announce price hikes
Around two million private health insurance subscribers face average increases of between 16 and 23 per cent next year following price rises announced by two of the main companies in the market. VHI Healthcare, the largest health insurer in the country is to raise subscriptions by an average 23 per cent from the beginning of January.
The increase 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.
Quinn healthcare said it was increasing prices by an average of 16 per cent for 2009.
VHI said the increase was due to factors such as increasing demand for medical care, the Government’s decision to increase charges for private beds in public hospitals and rising costs in private hospital and for consultants.
VHI chief executive Jimmy Tolan said it was not passing on the cost of the health insurance levy introduced in recent weeks by Minister for Health Mary Harney.
He said VHI was forecasting a deficit of €60 million for the end months to the end of December. He added that the company was paying out €30 million more than it had received in premium income and said it was projecting losses of €30 million on its investment portfolio.
However Quinn healthcare said its price 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 that we would have otherwise done," it said.
Last week, the Government announced the introduction of a €300 million tax-relief scheme to subsidise health insurance costs for subscribers aged 50 and over.
It said the new scheme would be paid for through a new €160 levy to be imposed on insurance companies for every adult with health insurance.
Quinn healthcare's chief executive Colin Morgan said the insurer was "disappointed that the Government "continues to be more concerned with protecting the dominant position of the VHI, which made record profits of €112m last year", than providing for fair competition in the health insurance market.
"The measures announced last week will result in VHI's competitors paying in excess of €40m per year and, while it appears that some of this is going to the government, the VHI will benefit the most from this. In essence these new measures represent a stealth tax on health insurance consumers," said Mr Morgan.
"The measures themselves are fundamentally flawed, as the €60 levy is due per member, irrespective of the level of cover a member has. This means that less well-off people on lower plans will be subsidising those better off who can afford premium plans," he added.
The Government was forced to act after the Supreme Court decided in July to strike down the risk-equalisation scheme which was supposed to compensate insurers with a greater number of older people on their books.
In a unanimous ruling in a case brought by Bupa Ireland, the court found that the introduction of a risk equalisation scheme by the Minister for Health in December 2006 had been based on a wrong interpretation of law and should be set aside.
Risk equalisation was a compensation scheme under which companies such as the VHI, which has a larger number of older subscribers, would receive payments from rivals with a relatively younger membership profile. The Government had said the scheme was essential to underpin the concept of community rating, under which everyone pays the same for the same product, regardless of age.
Under the new measures, a new “community rating levy” of €160 for adults and €53 for children will be placed on insurance companies.
VHI, which has more older members than the other health insurance firms, welcomed the Government's move while both Quinn healthcare and Hibernian Health warned that while they would endeavour to minimise price increases, it was possible that they would have to pass on some or all of the cost, to its members.
Hibernian Health said this afternoon it has no plans to increase its health insurance premiums at this time.
The insurer added it has sought clarity on recent regulations from the Department of Health and Children and said it believes the proposals "are unwarranted, extreme and a source of State aid".