The country’s largest health insurer, the State-owned VHI, has announced further price increases of an average of 6 per cent for its 1.2 million subscribers.
The increase is the fifth in a little over two years and was reported by The Irish Times this morning.
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.
In a statement this morning, the company said the increase was driven by the increasing volume and cost of claims, an ageing membership and the ineffectiveness of the risk equalisation scheme and ongoing medical innovations which impact on the cost of care.
The company said it achieved annual savings of €100 million last year and would be seeking savings of a further €100 million by the end of 2015.
“Consultant fees are now at pre-2004 levels, there have been price reductions of between 13 per cent and 53 per cent for various procedures and 80 per cent of procedures are now performed on a day-case basis," it said.
The company criticised the operation of the risk equalisation scheme, which it said only compensated insurers with older customers for about half of the real cost, meaning that “the incentive to cherrypick younger, healthier lives is greater than ever".
It added: "The reality is that while VHI Healthcare has 56 per cent marketshare we are paying nearly 80 per cent of the claims.”
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 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.
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.
