Vhi Healthcare today announced health insurance premium hikes of 15%. For their average family customers, rates will increase next month by approximately €331 per annum or €27.60 per month (price of two adults and two children on the Parents & Kids plan) and that the same price increase of 15% will apply to the premiums of 60% of its customers.
The price increase will be effective for renewals from February 01, 2011 and is said to be necessary to cover the cost of providing quality care to our customers over the next 12 months.
Speaking at the announcement, Jimmy Tolan, chief executive, Vhi Healthcare, said “year on year our customers continue to need to access more healthcare services and we have to set premiums to cover the cost of this. We anticipate that our customers will require 10% more healthcare in 2011 compared to 2010. In addition the recently announced increases in public hospitals of 21% which will increase our healthcare costs by €60 million in 2011 together with further planned increases for 2012 accounted for 8% of the planned price increase. Over the last two years we have taken many steps to contain the rising costs of meeting our customers healthcare needs. These include a 15% reduction in consultants fees, 6% reduction in private hospital fees, agreeing maximum revenue levels for private hospitals and an annual reduction in administration costs of €15 million. Today’s price increase is necessary to provide healthcare cover for all of our customers.”
At the launch of the Annual Report for 2009 last July, Jimmy Toolan said the company lost 120,000 customers in the year. The insurer spent over €1.3bn in funding the healthcare needs of its customers. This was up 14% on the previous year - - at a time of price deflation - - with over 50% spent meeting the healthcare needs of its older customers. VHI lost a further 48,000 subscribers last year.
In 2009, VHI’s average healthcare spend
per customer was €900 which is twice the level of its market competitors due to
the age profile and health status of its customers.
Families on the Parents & Kids plan, Vhi Healthcare’s most popular family plan, will see their premiums increase by 15% in February 2011 or approximately €331 per year. Over the past two years families have seen prices increase by 13% in total as we decreased our child rate on our most popular family plans in 2009. This compares favourably with family customers of one of Vhi Healthcare’s competitors who have seen their premiums increase by 33% in the same timeframe.
Premiums for a family of two adults and two children on Vhi Healthcare’s Parents & Kids:
The One Plans in April 2010 cover over 78,000 customers on these plans.
Premiums for a family of two adults and 2 children on Vhi Healthcare’s One+ Plan:
Plan B Options to cost 45% more
Health insurer Aviva said is deeply concerned about the decision by VHI to increase the cost of health insurance for hundreds of thousands of its most vulnerable customers by 45%. The 45% increase announced today and VHI’s call for increases in the health insurance levy show that VHI has abandoned community rating in favour of targeting younger customers with poor value plans that offer lower levels of benefits for consumers.
Aviva said that over 2.2m health insurance customers have seen and heard many, many statements about reform of the VHI’s broken model and yet none of these statements have been supported by meaningful action from Government. With today’s 45% increases, the continued deterioration in the VHI’s reserves and its continued failure to meet the regulatory requirements for insurance companies, it is clear that the VHI continues to operate without accountability.
The insurer said strong intervention by the Government is now an urgent requirement to prevent the VHI from continually penalising its most vulnerable customers with unaffordable increases while simultaneously ignoring the significant cost savings to be made by reforming the VHI.
"Another key fact which the VHI has chosen to ignore today is the gaping hole in its solvency reserves. The VHI or the Department of Health and Children must immediately clarify how many hundreds of millions of taxpayer’s money will be required to ensure health insurance remains affordable for all," Aviva said.
Vhi said it incurred losses of €100m on the two health insurance plans last year.
The State-owned insurer will increase the premium for one adult on Plan B by €317 to €1,224 and Plan B Options by €444 to €1,430 from February 1, 2011. This will be an increase of €26 per month for Plan B customers and €37 per month for Plan B Options customers. 29% of Vhi Healthcare’s customers currently have Plan B or Plan B Options.
Jimmy Tolan added: “ We regret having to implement this very difficult pricing decision. Unfortunately Vhi Healthcare can no longer afford to make available the very wide range of cover provided by these plans at the previous levels of pricing . Even with the announced price increases this will not prevent us from incurring significant losses in providing the cover under these plans .”
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