The VHI’s announcement that it is increasing its 2010 premium by between six per cent and 9.5 per cent from February 1st has been greeted with the usual mutterings.
You know each one of them well by now: that the cost of private health services can still be rising when the wider consumer price index is falling by 6.5 per cent a year, resulting in a real cost increase of 14 per cent (in the case of the VHI).
The other two insurers (Quinn Healthcare increased rates by 15 per cent last November for renewals; Hibernian Aviva by 12 per cent last October) also site medical cost inflation.
But consider this: the €160 per adult and €53 per child member health insurance levy, t introduced this time last year, increased from this January 1st by €25 for an adult and €2 for a child member.
This is also a factor contributing to the disproportionately higher premiums that the nation’s 2.2 million health insurance members are now paying.
This industry wide levy was arbitrarily introduced by the Government – specifically the Department of Health to whom the wholly state-owned VHI is answerable.
This followed the Supreme Court’s throwing out the Government’s original risk equalisation legislation back in 2008.
Had that been green-lit, it would have forced other private health insurers to compensate the VHI for its historic legacy of so many more elderly members. Of course, this issue would not have existed if the VHI had been privatised.
Today, because of the disproportionate number of older members and medical cost inflation, that the VHI mainly blames for its financial difficulties. But this does not tell the whole story.
The levy (it’s really a tax) was worth around €50 million last year to the VHI yet despite this subsidy the state owned company still lost €80 million last year and 120,000 members.
It has been suggested before here that the VHI operates as a subsidiary of the Department of Health, rather than as a fully regulated, independent participant in the market.
Proof of this is that despite its huge losses and the fact that its have undertaken cost reductions this past year, the VHI has instituted no major cost cutting or redundancies.
It continues to operate a hugely expensive, but insolvent defined benefit pension scheme; it maintains a civil service-based pay and increment scale and still operates eight different offices around the country.
Unless any change to the VHI’s operation is brought about, costs will keep going up and the entire community-rated private health insurance system will be put at risk.
Private health insurance under community-rating is, after all, nothing more than an elaborate pyramid scheme.
Why? Younger, healthier members willingly subsidise older, sicker ones because they expect the same subsidy when they become older. It is, however, younger members who are not joining or who are dropping their private insurance, not older ones.
According to independent, fee-based health service consultants like Dermot Goode despite the millions in tax subsidy it receives, they foresee the VHI will continue to be the most expensive health insurance providers.
So here’s my first, guaranteed, money-savings tip of the New Year: buy or switch your cover to the equivalent (or lower equivalent) corporate scheme.
Few of us realise, says Goode, that under community-rating everyone, not just employers or their workers, are entitled to buy a corporate health care plan, which will be cheaper than its equivalent individual plan.
So that’s exactly what I did last week: I switched my family of three from the excellent Quinn ‘Health Manager’ plan we are on, to the equivalent Quinn ‘Corporate Care Premium’ plan and saved us €231 with that one phone-call.
Had I decided to drop back down to the corporate version, ‘Company Health Plus’ of a plan we had a few years ago, ‘Essential Plus’, I am told I would have saved many more hundreds of euro.
Until the rotten business of the subsidisation of the VHI and the civil service mandarins who oversee it is finally addressed, (but don’t hold your breath), you should do the same, either within VHI or with another provider.
Since it’s very difficult to find the VHI corporate equivalent plans – unlike Quinn and Hibernian Aviva, VHI don’t make this information available on its website – consider hiring a good broker for a modest fee of €100 plus VAT to do the comparison for you.
It’s high time that the 2.2 million people who clearly want health insurance fight back against the state’s manipulation of this important market.
For all your banking and insurance needs, check out Postbank at your local post office or LoCall1890 303040. For more from Jill, log onto www.jillkerby.ie