The Minister for Health, Mr Martin, has indicated he will give favourable consideration to a request from the VHI to increase its premiums by 8.5 per cent from September.
At a news conference in Galway yesterday afternoon, he said the proposed increase compared favourably to last year's 18 per cent hike in premiums. "The forecast last year would be that they were looking at a 15 to 18 per cent increase again this year," he said.
Mr Martin described the proposed increase, which he has the power to veto, as "minimal" given the rising costs of healthcare. He said the overall cost of health insurance here compared favourably with other European countries. "I think that the product is still a good product and the price compares very well with other products internationally," he said.
If approved, the increase will bring the total rise in premiums for VHI subscribers over the last three years to 41.75 per cent. Over the same period, general inflation has increased by 13.2 per cent but medical inflation is accepted as running at up to 10 per cent per annum.
Mr Martin said he planned to put the proposed price increase to the Government and indicated there was "a good chance" it would be accepted.
However a Government spokeswoman last night said there was "concern" within the Government about the application, which was sent to Mr Martin last Thursday.
While the matter was not on the agenda for today's Cabinet meeting, she said it "might very well" be discussed.
Earlier yesterday the VHI's chief executive, Mr Vincent Sheridan, defended the planned price increase, which will mean individuals paying an extra €36 a year for the VHI's most popular plan B product and a family of two adults and two children having to pay €99.66 extra for a similar product.
He stressed that the price rise was to cover new drugs on the market such as Herceptin for women with breast cancer which costs €50,000 a patient and new technologies such as PET scans, which cost €2,000 each.
"This is what our members want. This is what keeps people alive longer and in better health," he said. He insisted the product bought by members in 2003 was different to what they bought in 2002.
"For every €100 we get in, €90 goes out to pay claims costs. That's about €11.4 million every week," he said. "We absorb less than €9 out of that €100 on our own operating costs . . . and the rest goes by way of surplus to keep our solvency straight."
A further factor in the price rise was a recently negotiated 6 per cent increase in the general fees paid by the VHI to hospital consultants. Some consultants will be awarded an 8 per cent fee increase but the VHI defended the increase, saying consultants were doing more work for the VHI, which has 1.5 million subscribers.
The Competition Authority is at present examining how consultants as a body agree fee rates with the VHI.
Furthermore, it said health insurance was much more expensive in other countries.
In Germany a 45-year-old pays about €300 a month for a policy similar to plan B and in Britain the premium would be twice that of plan B for young policy-holders. Plan B will cost an individual €466.31 after the price increase and a family plan, with similar benefits, will cost €1,272.06.
While BUPA, the only other health insurer in the Irish market, issued a statement saying it had no plans to increase its prices for the remainder of this year, it already increased the cost of premiums by 14 per cent on March 1st.