From January next year two million health insurance customers of VHI and Quinn-healthcare will face major hikes in premiums. These rises are coming at a time costs of many other essentials have hit the sky, and will all add up to EUR3,000 (£2,480), on average, to household bills, experts have warned.

Reasons given for the premium hikes

The decision by the Republic of Ireland’s two major health insurers to increase their prices is provoking a lot of reactions, even as the firms claimed they were necessitated by soaring costs. One of these costs, in fact, is believed to be the recent healthcare levy introduced by the Government. Specifically Quinn Healthcare blamed the levy for the increases, while VHI said they were needed to enable it fund the needs of its 1.5 million policyholders.

Health Minister Mary Harney, however, denied the levy was responsible, arguing that the EUR160 (about £132) levy was introduced to offset the cost of EUR300 million (nearly £250 million) in additional tax relief provided to older health insurance customers.

If the levy had not been introduced, claimed Ms Harney, the cost of health insurance premiums would increase four times for many older people.

Further hoping to absolve the Government of complicity the minister explained that the VHI had absorbed the cost and it could not have been the cause.

In spite of the Government’s effort to claim that the levy was introduced in good faith even Quinn Healthcare has advanced the argument that it was aimed at protecting the dominant position of rival VHI.

All the above positions notwithstanding, the bottom-line is that subscribers will be paying a lot more to keep their health insurance policies. Whereas the VHI 23 per cent price increases will result in the cost of its popular Plan B for one adult rising from EUR664.66 (nearly £600) to EUR828 (£685) – an increase of EUR163.34 (£135) - the insurers Plan B for two adults and two children will record a EUR442.82 (£366) increase.

In the case of Quinn Healthcare reports said the price of its “essential plus” starter product will jump from EUR1,248 (£1,032) to EUR1,388 (£1,148) for two adults and two children. In the same vein other major health insurance companies in the Republic are expected to raise the prices of their products. But Hibernian Health has stated that it, in the meantime, has no plans to hike its premiums.

Although Ms Harney has expressed concern over the hikes saying it “would be a major burden on families” who, in any case, are struggling to cope with the credit crunch, it must not be forgotten that it was the legislation she introduced last year that made it possible for the firms to set their own price levels.

Even as accusations and counteraccusations are being traded, what is very clear is that an extra burden on households – of such proportion – could adversely affect the health insurance market. This position is succinctly put by Sinn Féin’s health spokesman Caoimhghín Ó Caoláin who warned the increases would force many people to give up their policies.

In the meantime, people could do much for themselves by making sure they shop around for the policies that best suit their needs. In this way they would be able to save on insurance costs and get value for their money.