Health insurance premiums are set to rise by up to 40 per cent as a result of Government plans to increase charges on private patients in public hospitals, an Oireachtas committee has heard.
The new charges would cost health insurers €250 million over the next three years, resulting in a significant hike in premiums, company representatives told the Oireachtas health committee yesterday.
Donal Clancy, managing director of Laya Healthcare, said the proposed charges would result in a 20-40 per cent increase in premiums. The could prove to be “the straw that broke the camel’s back”, he warned.
‘Game over’
Unless they were changed it would be “game over” and the market would shrink to a fraction of its current size, he predicted. The effect on the exchequer’s finances would be the opposite of what was hoped.
Minister for Health James Reilly hopes to raise an extra €60 million this year by charging all private patients in public hospitals, whether or not they get a private bed. The State charges about €1,000 a night for a private bed, compared to the €75 cost of a public bed.
John O’Dwyer, chief executive of VHI, said the plan would result in a significant increase in charges if it went ahead as proposed.
Jim Dowdall, chief executive of Glo Health, said the market was fast approaching a tipping point of unaffordability. He criticised the manner in which the department introduced a two-tier insurance levy, which means that some with a basic €500 policy would end up paying the same amount of levy as someone who could afford a €4,000 plan.
When the levy is increased at the end of March, a family of four will be paying €940 a year in levy charges as part of their health insurance premium, he pointed out.
Mr O’Dwyer defended the VHI against claims that its costs were high, saying it was “obsessed” with driving down costs. Its administration costs were 6.3 per cent, which was at “Champions League” level in international terms, he said.
Some 80 retired staff benefit from free health insurance, Mr O’Dwyer confirmed, but this practice was ended in 2002. Increments had been stopped and pension contributions increased, he added.
‘Cherry-picking’
Mr O’Dwyer said it cost an insurer €1,000 less to provide cover for a 35-year-old compared to a 75-year-old, and this was leading to cherry-picking of customers.
