Despite strong criticism of its nine per cent rise in subscriptions, the VHI has confirmed that it will continue to implement increases in charges on an annual basis. The Minister for Health and Children, Mr Cowen, has "noted" the board's intention to impose the largest increase in the company's history from September
1st.
All five VHI "plans" will be affected, with the new annual rate for a married couple with two children varying between £484.64 a year (Plan A) and
£2,064.74 (Plan E).
Defending the decision, the VHI chief executive, Mr Aidan Walsh, said yesterday that intensified demand, "exceptional costings" arising from price increases in public hospitals, and underlying inflation had led to the rise, which would cover the next 12 months. There would be no increases in the interim.
The higher charges - which mean a 33 per cent increase over the last four years - "has to be compared with an increase in public health expenditure of 64
per cent over five years", Mr Walsh said.
The national executive of SIPTU said it was "outraged". It criticised the
Government's role "in the latest attempt to hike VHI bills by over four times the rate of inflation, adding more than £20 per person to most average subscribers' bills".
The SIPTU president, Mr Jimmy Somers, said that while his union accepted the need for greater efficiencies "and tougher negotiations, particularly with consultants and service suppliers", the main reason VHI sought such a large leap in premiums now was directly attributable to the £8 million increase
"demanded by the Department of Health itself for private beds in public hospitals.
"In other words, while the Minister for Health is calling for the VHI to do
`whatever it takes' in terms of outside money or expertise to ensure the VHI
remains viable, it is entirely within his power to moderate the fees being demanded of and by the VHI," said Mr Somers.
In a statement yesterday, the Department said that accommodation charges in public hospitals "had been unchanged since July 1st, 1993. The increase was in line with the increase in the Consumer Price Index since July 1993 and the forecast for inflation for 1997, and was considerably less than the overall increase of about 30 per cent in general hospital expenditure from 1993 to
1997".
The Department argued that this additional cost was only one of many factors contributing to the latest increase. It also cited the volume of claims, the ageing population and greater customer demands.
Mr Cowen has said he had no choice but to allow the price increases as the
VHI had made it clear that unless it was allowed to pursue extra revenue and further cost savings, it would report a deficit in the current year.