More than 1½ million holders of private health insurance across the State face a 12.5 per cent rise in the cost of their premiums following the decision of the VHI yesterday to seek an increase. Eithne Donnellan, Health Correspondent, reports
The VHI's decision comes just days after the company sharply criticised the decision of Tánaiste and Minister for Health Mary Harney not to introduce risk equalisation.
The VHI hopes to increase prices in September. It announced the decision following a board meeting at which the implications of Ms Harney's decision on risk equalisation were considered again.
However, VHI chief executive Vincent Sheridan insisted the price increase had nothing to do with the decision not to introduce risk equalisation.
He said the single biggest factor contributing to the price increase was the decision by Ms Harney in January to add 25 per cent to the cost of private beds in public hospitals. This added 6 per cent to VHI's costs, he said.
Other factors influencing the price increase were the increasing volume of medical claims, the cost of new medical technologies and increased fees to hospital consultants. Mr Sheridan confirmed the VHI had written to individual consultants offering them average increases of 4¼ per cent over each of the next two years.
He said the VHI would bear the cost of Ms Harney's decision on risk equalisation from its reserves, which it also did last year and as a result would incur financial losses this year, although it made a profit of €77 million last year. To pass the cost of the absence of risk equalisation on to consumers would add another 5.5 per cent to premiums and would be "commercial suicide".
The VHI's planned price increase - which is more than four times the 3 per cent increase it sought last year - has been conveyed to Ms Harney, who has the right to veto it. Informed sources last night indicated that she was unlikely to do this.
The increase will see the price of VHI's most popular policy, Plan B, increase by €61 a year for an adult and by €165 a year for two adults and two children.
Ms Harney said she had decided against introducing risk equalisation until the Government began converting the VHI to a commercial company. But Bernard Collins, chairman of VHI, in a letter to Ms Harney, yesterday warned that if the VHI continues dipping into its reserves to offset the cost of the absence of risk equalisation it could be refused a licence by Ifsra to operate on a commercial basis, which is precisely what Ms Harney wants it to do.