Ageing membership and cost of updating technology blamed for VHI increases

AN ageing membership and new technology are among the main reasons for the VHI's ever increasing premium rates, according to the company's financial director, Mr John J. Looney. But he, defended the company's service as still "good value for money".

"Adults on Plan B, to which 72 per cent of our members belong, are still paying less than half what their British counterpart would pay," he said, "even allowing for the different structure in the health insurance service there."

The VHI's figures for 1996 have yet to be announced, but "a break even to small surplus" was expected, Mr Looney said. He said "the average 6 per cent increase in VHI rates this past six years "compares favourably with the average 3 per cent consumer price index when one takes health inflation into account".

Medical costs were rising and would continue to rise, he said. New technology alone would cost the company £2 million this year.

Despite the annual increases, he said there had also been a growth of "an average 2 per cent in membership" in recent years. He said it was incorrect to say the VHI did not have competition, and pointed to public medicine as an alternative for the 36 per cent of the population who were covered by the company.

Mr Looney "welcomed" the imminent arrival of BUPA, the British health insurance company, to the Irish market, as "it should enable us to show the good job we have been doing up to now". He found it "hard to believe" that BUPA could do a better deal (than the VHI) with the service providers (hospitals and doctors).

A spokeswoman for BUPA said it hoped to be in operation here by the end of this year. The company's Irish operation would be completely autonomous" from its British operations, she said. The company is conducting market research into the requirements of Irish consumers and is having talks with doctors and the hospitals.

She said BUPA hoped to offer greater flexibility and choice in medical services and bad presented hospitals with some procedural guidelines as to how this might be done.

"We will be offering flexibility choice, and value for money.

Following yesterday's announcement, the VHI's Plan A will go up from £419.46 a year, to £444.62, for a married couple with two children, group rates. It's most popular plan, Plan B, will increase from £612.78 to £649.56, up by £36.78. Plan C goes up from £963.62 to £1,021.44 Plan D from £1,185.58 to £1,256.72 while Plan E increases from £1,787.02 to £1,894.24.

A spokesman for the Consumers' Association of Ireland said the cost of Plan B had gone up by "almost 40 per cent in six years". He considered this "absolutely astounding", and described the announcement as "a major blow to the long suffering VHI sufferer".

Last year, VHI premiums went 9p by 6 per cent also. In 1994, the increase was 9 per cent. The rate of inflation increased by 2.5 per cent in 1995 and 2.4 per cent in 1994.