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VHI announces huge price hikes
[Posted: Thu 06/01/2011 www.irishhealth.com]
The VHI has announced a 15% hike in premiums for some of its most popular plans from next month. However, some of its insurance plans will see their premiums rise by up to 45%.
VHI says the insurance premium for their average family customers will increase from February 1 by approximately €331 per annum and that an average increase of 15% will apply to the premiums of 60% of its customers.
The State-backed insurance company has cited the recently announced increase of 21% in charges for private beds in public hospitals as a factor in the price rise.
VHI Chief Executive Jimmy Tolan said the bed charge increase will add €60 million to its costs this year.
He said in recent years the VHI had taken many steps to contain the rising costs of meeting its customers' healthcare needs, including a 15% reduction in consultant fees.
"Today's price increase is necessary to provide healthcare cover for all our customers, Mr Tolan said.
The cost of VHI's most popular plan, the Parents and Kids Plan, will increase by €331 per year for a family of two adults and two children to €2,540.
The premium for the VHI's One+ Plan will cost €273 more this year for two adults and two children, rising to €2,093, while the cost of Plan B will increase by €317 to €1,224 for one adult, and Plan B Options will rise by €444 to €1,430 this year for one adult.
The latter plans tend to be taken out by older subscribers, leading to accusations this week that the VHI was particularly targeting its older and more expensive customers with premium hikes. However, older customers do havde the option of switching to alternative VHI plans or to other insurers.
VHI says 60% of its customers will see the cost of their premiums increase by 15% when their policy falls due for renewal during the coming year. The 15% increase will apply to its Plan A, Parents and Kids, LifeStage Choices and One plans, with other plans seeing premium hikes of between 21% and 45%.
The Plan B Options scheme will see the biggest premum hike, of 45%.
Quinn Healthcare was the first health insurer to raise its charges in 2011, with its premiums increasing by an average of 7.9% from January 1. Aviva may follow with price increases in the spring.
The Government recently increased the annual levy imposed on health insurance companies for from €185 to €205 for adults subscribers and from €55 to €66 for children, and this is also cited as a factor in rising insurance costs.
The latest VHI price hike means that many of its plans are considerably more expensive than those of its rivals, although direct comparisons are difficult, as all three main insurers now offer a plethora of plans with different levels of benefits and extras.
However, following recent increases, comparing three popular plans from the three insurers for two adults and two children offering a basic package of semi-private cover in private hospitals and private cover in public hospitals, the current rates are:
VHI Parents and Kids - €2,539 per annum
Aviva Level 2 Hospital - €2,030 per annum
Quinn Essential Health - €1,902 per annum.
Thne number of people who have stopped purchasing health insurance has continued to increase as the effect of the recession on people's incomes has grown.
Around 50,000 people gave up their health insurance between June 2009 and September 2010 and the proportion of the population covered by health insurance has now dropped below 50% for the first time in a number of years.
Q&A
Why did VHI increase its premia by so much?
Its price increases of up to 45% are a reflection of the financial and healthcare cover pressures it is under. We have an ageing population which is pushing up the demand for healthcare. The VHI has a greater number of older subscribers than the other two main insurers, which increases its healthcare cover costs. Mary Harney has increased the cost of private beds in public hospitals, a charge that directly falls on health insurers. Even without these factors, normal advances in health technology would push up insurance costs to a certain extent. Quinn recently imposed smaller increases in its premia and Aviva is likely to increase its premia later this year. Given the size of the VHI, however, its frequent high premium increases pose the question of whether its cost-base is as slim as it could be.
Is there much scope to shop around for better value in health insurance?
Certainly. While the market has become very confusing with a plethora of different plans across the different companies, savings can be made by switching to cheaper plans within VHI, to cheaper corporate plans or to similar plans with other insurance companies. Older people, who have been particularly targeted for high premium increases, have scope to get better value within VHI or elsewhere and the average family seeking fairly basic hospital cover can make substantial savings by switching from VHI to the other insurers for this type of plan (See above).
How easy is it for older people to change insurers?
Some older people may be under the impression that if they try to change their health insurance they will be refused or restrictions will be placed on or barriers placed to their cover. In fact there are little or no such restrictions. A company cannot refuse cover for anyone trying to switch provided they have not had a break in their cover for over 13 weeks. If you switch to a policy with similar benefits there is no waiting period for cover; if the new policy has extra benefits, waiting periods can be imposed.
The health insurance market, and the entire healthcare system, seems to be in a a mess, with considerable uncertainty about access and cost across the the public and private systems. Will things improve?
Mary Harney last year announced plans to restructure the health insurance market following the declaration by the courts that the then risk equalisation scheme was illegal. This plan includes selling off the State-run VHI, a new risk equalisation scheme that will uphold community rating, and better competition. Her plans to reform the healthcare system as a whole have progressed very slowly. Fine Gael, which is likely to be in Government from April, promises a radical reform of how healthcare is delivered funded by universal health insurance run by a private insurer. This, the party says, will stabilise and streamline the healthcare system and will ensure that people they wil be covered for healthcare at either no cost or an affordable cost, depending on their circumstances.
Remind me again - what is risk equalisation and community rating and do these things matter?
Under the old risk equalisation scheme insurance companies with lower numbers of older and more expensive subscribers had to compensate companies, in this case the VHI, who had higher numbers of these subscribers. The ending of this subsidy following the successful legal challenge to the scheme has hit the VHI's finances. Community rating is where everyone is charged the same premium level regarof age. Pending the introduction of a new equalisation structure, the Government imposed a levy on health insurers aimed at protecting community rating by funding subsidies on insurance subscriptions of older subscribers. The VHI says these subsidies do not fully cover the losses incurred in covering older subscribers.
If we still have community rating, why is the VHI being accused of penalising older members?
While VHI cannot legally charge older subscribers more, it can effectively do this by the 'back-door' by imposing larger increases on its plans that historically are more popular with older subscribers. Similarly, companies can try to increase a younger and cheaper membership base by devising and a marketing policies that would be more attractive to this market sector.
But isn't health insurance here relatively cheap compared to other countries?
It is, but in other countries it tends to be an 'optional extra' as they usually have a fairly efficient and equitable access to healthcare. Here, health insurance is a necessity for many who seek to avoid the inequity of the public system. It is also becoming more and more expensive here as healthcare costs continue to rise and our elderly population grows. The latest increases are a further burden on people already clobbered by recent tax rises, pay cuts andj ob losses. The frequent and recurring public debate over inefficient public care and the rising cost of private care typify the fault lines in an inequitable and confusing two-tier system which is badly in need of reform. Both Fine Gael and Labour have ambitious plans plans to to fix the broken system but given the enormity of the task, it remains to be seen how successful they will be.
See also 'Health insurance costs continue to rise'
See also 'Ample choice in insurance market'
For further information about health insurance and switching plans or insurance companies, visit the Health Insurance Authority's website here
Jamie Posted:
07/01/2011 12:48 |
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And as usual, when something big happens in this country, the minister involved is on holidays. If this government was the script for a comedy show, the writers would have stopped long ago because it's so far fetched |
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buzz Posted:
07/01/2011 14:33 |
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It's amazing they can just up their rates without being answerable to anyone. We need more competition or some form of regulation. |
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ciaobellaciao1 Posted:
07/01/2011 15:38 |
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Crazy how much healthcare costs in Ireland, and the poor quality of healthcare compared to countries in mainland Europe. I'd advise anyone who needs to see a specialist for any health issue wanting to avoid Irish hospital with waiting lists to go to France, Belgium, Netherlands or Germany where you can get appointments/scans, etc. within a week or so. Specialist fees in these countries for example are about a third less expensive than in Ireland. Ireland is a third-world country when it comes to healthcare. Also grossly unfair that health insurance costs an arm and a leg here, meaning that if you're poor & ill you can die, literally. Very sad. |
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Anonymous Posted:
10/01/2011 15:36 |
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True for you Ciaobella, it is outrageous. What will happen is that more and more people will stop paying, putting intolerable pressue on a public system already under severe strain. Fine Gael it seems wants the system run by a private insurer - and this exactly the shambolic mess that the U.S. is paying trillions to extricate itself from, where healthcare and the type of diagnostics and treatment a person recieves is not decided by doctors but by faceless nameless non-medically qualified insurance execs. |
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RMKillaloe Posted:
24/02/2011 15:53 |
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VHI recently wrote to inform me that they are increasing my family premium from €1600 to €2500! I notice today, that the brand new state of the art Cork medical Centre has had to put 75 staff on protective notice because VHI refuse to provide cover on the basis that, in their opinion, there are enough private beds in the country already!! Am I missing something here?? I am of the view that VHI only pays for the procedure, they dont have to buy the bed etc and that their cost is more or less the same regardless of where the procedure takes place. So, why should it make any difference to them if new hospitals are built and I want to attend them for cover? I, as a subscriber, should be able to choose where I have my procedure carried out! I live in Co Clare where we have extremely limited and poor facilities for private patients and I think the VHI have a cheek, to try to limit my choices to quality 21st century healthcare! |
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