The VHI is to increase its premiums by 9 per cent from September 1st. The company says the increase is necessary to meet the additional cost of providing the best health care to members.
The increase will add an additional £23.43 per annum to the cost of the VHI's main Plan B for an adult on group rates, which after tax relief would be £215.
Last year, the VHI also raised its subscriptions by 9 per cent, the highest increase it had imposed. Despite strong criticism then, it confirmed that it would continue to implement increased charges on an annual basis.
VHI's rival, BUPA Ireland, claimed last night that the VHI was now 22 per cent dearer on its mainstream plan for health insurance than was BUPA's competing product.
BUPA claimed that the VHI's mainstream product, Plan B Option, was, at £315 per annum (group rate) for an adult, £56 more expensive than BUPA Ireland's competing Essential Plus Scheme, which offered a similar level of benefit. For a family of two adults and two children on these schemes, the VHI was 22 per cent dearer than BUPA, a difference of £158, according to BUPA.
In a statement announcing the increase yesterday, the VHI said that each year there was an increase in demand for, and cost of, health care. The overall cost of claims had risen to £17.8 million last year. From 1992 to 1998, the volume of hospital scheme claims paid by the VHI had increased by an average of 6.7 per cent each year.
The VHI listed six reasons for the rise in medical costs as:
a 12 per cent increase in the cost of private beds in public hospitals;
members having access to an increased number of - and improved - medical procedures and technologies;
the cost of doctors and the private hospital service had risen by 7.4 per cent;
the average cost of a week in a semi-private bed in a private hospital, including consultants' fees, was now £2,200, up from £881 in 1987;
an ageing population which required more treatment;
the growth of defensive medicine in an increasingly litigious society. This last reason, the statement said, could prompt a multiplicity of tests and procedures.
The increase in charges for private and semi-private beds in public hospitals, due to be implemented from January 1st, would increase the VHI's annual public hospital costs by £8.22 million. The VHI paid out almost £300 million on claims annually, it stated.
The VHI's financial results for the year to February 28th, 1998, showed a surplus of £2.8 million, compared to £1.6 million for the previous year. The £2.8 million surplus represented a return of less than 1 per cent on the premium income of the board.