VHI to announce 6% rise in premiums

The country’s largest health insurer, the State-owned VHI, is today expected to announce further price increases of an average of 6 per cent for its 1.2 million subscribers.

The increase will be the fifth in about two years.

Prices increased by up to 3 per cent in November last, and in March it increased prices by between 6 per cent and 12.5 per cent, on top of a 1.9 per cent rise the previous November.

It is understood the company reduced the scale of the latest increase after coming under strong pressure in recent weeks from Minister for Health James Reilly.

Sources said the company had originally signalled several weeks ago that it wanted to introduce increases of about 11 per cent but the Minister objected.

Earlier this week Dr Reilly is also understood to have opposed proposals for an average 8 per cent rise in subscription premiums when he met senior figures in the company.

The Minister argued that the company needed to tackle its cost base.

It is understood that he is now seeking for the VHI to draw up a new overall strategy, as well as a separate cost-containment plan.

Dr Reilly is also believed to have met outside management consultants Milliman, who are advising on the VHI’s costs and have made specific recommendations.

Sole shareholder

The VHI is no longer required to seek the approval of the Minister for Health for any price increase on foot of legislation introduced by the previous minister for health Mary Harney several years ago. However, the Government is the sole shareholder of the company.

This is believed to be the first instance since liberalisation in which a Minister has put pressure on the insurer to alter its plans for setting its prices.

It is understood that the Minister argued that further large-scale price increases were unacceptable as they would lead to a further fall-off in numbers insured.

Dr Reilly is believed to have argued that the company needed to take a number of measures such as reviewing how it historically paid for particular procedures. He has also suggested a clinical audit of whether specific treatments were appropriate and a general audit to examine fees currently paid.

VHI currently has around 56 per cent of the Irish health insurance market.