VHI, the State-owned health insurance company, has announced its second price increase this year, which will see the cost of premiums rise by a further 3.5 per cent on average across its portfolio of health insurance plans. The increases, which will be introduced when customers renew their policy after October 1st, are a response to what the insurer called a “sustained increase in both the volume and costs of healthcare claims”. It will mean some VHI customers will have seen their premiums jump by between 10 per cent and 15 per cent in 2024 alone after the insurer increased premiums in March.
Ireland’s largest health insurance provider pushed ahead with average price increases of 7 per cent in March in a move that surprised industry observers. It followed shortly after a series of price hikes in 2023, the most recent of which came just three months before the March increase was announced in January 2024.
In a statement, VHI said it had seen a 14 per cent increase in private hospital claims since the start of 2024 compared with last year. VHI said it has seen a huge jump in the cost and volume of claims from members having procedures done at private hospitals.
The Rising Cost of Healthcare
The health insurance market in Ireland is “an open market”, and insurance providers can make price changes as they see fit, according to the Health Insurance Authority. The industry regulator said the total level of claims paid by insurers in 2023 rose by 15 per cent on the previous year, according to its monitoring of the market, “and there was a slight increase in claims for private hospitals”.
VHI said the latest price hike is in response to what it said was the sustained increase in both the volume and costs of healthcare claims. In the first half of the year, VHI has seen a 14pc increase in private hospital claim costs when compared with last year, it said.
Healthcare costs are rising as more people are accessing much-needed healthcare, VHI said. The costs associated with the delivery of healthcare are rising driven primarily by the increased costs in private hospitals and associated healthcare professional costs. The cost of day-to-day claims have also increased significantly, VHI said.
Impact on Premiums
The new price rise will add from €50 on a mid-level scheme such as One Plus Plan to €260 on VHI’s top scheme which is Premium Care. The typical cost for a family of two adults and two children could increase by up to €150 on a mid-level plan, but not all plans will be impacted, according to broker Dermot Goode of TotalHealthCover.ie.
However, VHI said it had tried to “somewhat mitigate” this week’s price increase by reducing the cost of children’s premiums on selected plans by 25 per cent. The insurer said it would also add day-to-day benefits to some plans. VHI said it is reducing the cost of children’s premiums on selected plans by 25pc, also from October 1. And day-to-day benefits have been added to some plans.
Customer Concerns
Consumers need to be wary of these average figures, said Dermot Goode, head of Lockton Insurance Brokers’ healthcare division. “The average being quoted by VHI is 3.5pc but some of their older plans such as Advanced Care Extra Day-to-Day and Premium Care will increase by approximately 5pc,” he said. “Consumers also need to note that this is their second increase this year which means that the cumulative impact for those renewing on or after the 1st of October could be 10 per cent to 15 per cent depending on the plan held.”
Mr Goode said further increases this year could not be ruled out and as we enter the peak renewal period between October and February, there was a “real risk” that some customers would be “priced out” of the market.
VHI’s Perspective
Commenting on the latest price hike, VHI managing director Aaron Keogh said the insurer took the decision to increase prices because premium income has not kept pace with healthcare demand and associated claims costs. “We have to price prudently for the future so that we remain in a position to meet the healthcare needs of our members,” he said. “We understand the affordability challenges that many people are facing and the importance that is placed on retaining health insurance and we are determined to continue to deliver value for money.”
Mr Keogh said the health insurer reported financial losses in 2023 reflecting what he said was the challenging environment for it. Published in April, the State-owned company’s 2023 results showed it had sunk to a €43.4 million loss, compared with a net surplus or profit of €34.3 million in 2022 amid an 18 per cent jump in the cost of claims and higher labour and energy costs.
A Broader Trend
The price hike by VHI comes days after its biggest rival, Laya Healthcare, said it was pushing up premiums for its 700,000 members by 6.5pc from the same date. VHI pushed through an average increase of 7pc in March this year on 58 plans. This is on top of two price rises last year, with the increases last October averaging 7pc. And earlier this year VHI said it was scrapping some of its most expensive plans, in a move set to force thousands of its older members to get alternative cover. The plans removed are some of the most popular options taken out by consumers. Some of the people on these plans, which are variations on the old Plan B schemes, have had them continuously for 30 years.
Looking Ahead
The rising cost of health insurance is a concern for many Irish families. While VHI has taken steps to mitigate the impact of the price increase, the future remains uncertain. As the demand for healthcare continues to grow, it is likely that health insurance premiums will continue to rise in the coming years. This is a trend that is not unique to Ireland, as healthcare costs are rising globally.
It is important for consumers to shop around and compare different health insurance plans to find the best value for money. They should also be aware of the potential impact of price increases on their budgets and consider their individual healthcare needs when making decisions about their health insurance coverage.
