Wednesday, January 30 10:10:56
Vhi Healthcare announced today that it will increase its prices by an average of 6pc from next month.
For most plans the price increase will be effective from 1st March 2013 and comes after a year in which around 2.1 million health insurance customers saw the cost of their cover increase by nearly 20pc.
Vhi said that its most popular plans One Plans ie One + Plan and One Plan Choice will see a price increase of 4.5pc.
It said the price increase is driven by a number of factors including the increasing volume and cost of claims, an ageing membership, an ineffective Risk Equalisation Scheme (RES) and the ongoing medical innovations which, while welcome, have an impact on the cost of care.
Vhi Healthcare has warned that the current RES scheme is insufficient to cover the healthcare costs of older customers and must be improved as this represents the biggest challenge for the market.
According to John O'Dwyer, Chief Executive, Vhi Healthcare, "We are aware of the enormous financial pressures facing our customers and have sought to keep the price increase as low as possible. We are totally focused on driving down costs in the organisation so that premiums remain affordable and we intend to build on the cost savings achieved to date. Since 2009 this approach has delivered savings of over E300m. Consultant fees are now at pre-2004 levels, there have been price reductions of between 13pc and 53pc for various procedures and 80pc of procedures are now performed on a day-case basis. Vhi Healthcare is committed to achieving further savings of E100m a year over the next three years."
"In order to keep health insurance affordable a robust Risk Equalisation Scheme is absolutely imperative. While we welcome the introduction of a permanent Risk Equalisation Scheme we still require a fairer distribution of risk throughout the market. Unfortunately the new scheme only compensates insurers with older customers for approximately 50pc of the real cost thus the incentive to cherrypick younger, healthier lives is greater than ever."
"The reality is that while Vhi Healthcare has 56pc marketshare we are paying nearly 80pc of the claims. This puts significant pressure on our cost base. The vast majority of older and sicker customers in the market are Vhi Healthcare customers with 90pc + share of the over 80 year olds, 80pc of the over 70's and 67pc of the over 60's. Vhi Healthcare continues to be the most efficient health insurance company in the market with administration costs of just 6.3pc of premium income for our health insurance business," he added.