On past evidence, the announcement by the VHI of a nine per cent increase in premiums will probably be met with weary resignation by most of its 1.4 million-plus subscribers. At this stage, VHI subscribers should be well accustomed to a hefty annual increase: the latest nine per cent increase comes after a similar increase only last year.
To compound the misery, there appears to be little confidence among subscribers that the situation will improve. The VHI appears unable to moderate the seemingly inexorable rise in the cost of medical treatment; inevitably these costs will, in time, be passed on to the consumer. As it is, the latest increase of nine per cent is some three times the level of inflation: medical inflation, it appears, is not subject to the kind of controls that are in place elsewhere in the economy. The VHI has mounted a strong rearguard action to defend the latest increases, listing no fewer than six separate factors in mitigation. Chief amongst these is the 12 per cent increase sought by the Department of Health for the provision of private beds in public hospitals. Other factors include the ageing population and the increasing use of improved medical procedures and technologies. The VHI also points out that the average cost of a week in a semi-private bed in a private hospital, including consultants' fees, is now £2,200, compared to just £881 in 1987.
The arrival of BUPA Ireland has, at least, provided a measure of competition for the VHI. BUPA now claims that its charges are up to 22 per cent cheaper than those of its State competitor, although it is often difficult for the average consumer to assess which company provides better value. It is also the case that many VHI members - mostly long-time subscribers and/or members of group schemes - are extremely reluctant to shop around. By some estimates the VHI has lost only about 15,000 of its members to BUPA in the past two years. But the VHI has not always demonstrated the necessary ability to secure the kind of efficiencies that would help to control costs. It has sought, but repeatedly failed, to flex its considerable muscle against consultants and other powerful vested interests. Despite the competition from BUPA, it still has some of the inefficiencies and practices associated with the monopoly culture.
It may be that the State's relationship with the VHI, which continues to operate without a chief executive because of government pay guidelines, also forms part of the problem. Most fair-minded people might agree with the view - articulated by Mr Alan Shatter of Fine Gael yesterday - that it is no longer tenable for the Minister for Health to perform the "contradictory role of regulator of private health insurance, owner of the VHI and price fixer for private beds in public hospitals". Mr Shatter's preferred solution is the establishment of an independent health authority to regulate the private health-care sector and help ensure that the market delivers cost-effective care. There may also be a case for a strategic alliance between the VHI and a new partner to give it a more independent footing. It is to be hoped that some of these issues will be explored more fully by the promised Government White Paper on health insurance. Otherwise, the patience of the average VHI subscriber may, at last, run out.