Dan White: VHI Q&A
What you can do to avoid VHI hikes
Q: Why is the VHI putting up its prices now?
A: The January price rise is now an annual VHI ritual. It blames an ageing population -- older people get sick more often and require more medical treatment -- and the Government's decision to increase the price it charges the VHI for public hospital beds by 21pc.
Q: Are all prices going up by 45pc?
A: No. The biggest price increases are for the VHI's Plan B and Plan B Options which are going up by 35pc and 45pc respectively. That translates into an annual increase of up to €444 per adult. However, the price of VHI's Parent & Kids Plan is going up by "only" 15pc. That is the equivalent of an annual increase of €330 for a family with two parents and two children.
Q: Why is the VHI hitting Plan B and Plan B options so hard?
A: Plan B and Plan B options are very popular with older customers, of whom the VHI has a disproportionate number. The VHI argues that, with 129,000 customers aged over 70, its rivals Aviva and Quinn are "cherrypicking" younger, more profitable customers. It claims with just over 60pc of all health insurance customers it is paying 80pc of all health insurance claims.
Q: So is the VHI trying to squeeze out its older, loss-making customers?
A: You might say that. I couldn't possibly comment.
Q: Even a 15pc price increase is pretty steep. Is there any way I can avoid it?
A: In the short-term, yes. The price increase doesn't come into effect until February 1. If you bring forward your renewal date, which any VHI subscriber is entitled to do, and renew your VHI policy now you can lock in the current, cheaper price for 12 months.
Q: But that’s only putting off the evil day. What do I do when prices eventually rise?
A: One result of the latest price increase is likely to be a huge increase in the number of people switching to Aviva and Quinn. Unfortunately trying to compare prices between the different health insurers is a bit like trying to compare apples and pears because they deliberately tweak their plans to ensure that they are not identical, thus making direct price comparisons virtually impossible. This best thing to do is to log on to the Health Insurance Authority's website, www.hie.ie. It includes a section that allows customers to compare plans from different health insurance companies.
Q: Is switching health insurance company difficult?
A: Not at all. So long as you are already a VHI member you can switch to one of the other health insurance companies immediately. There is no waiting period before you can make a claim on your new health insurance company.
Q: If I switch health insurer will pre-existing conditions still be covered?
A: So long as these conditions were already covered by the VHI then they will also be covered by your new health insurance company.
Q: So what should I do?
A: Irish people are extremely reluctant to switch suppliers, be it banks, phones, electricity, gas etc. The latest VHI price increase is likely to shock a lot of customers into considering whether or not to switch health insurance supplier, and not before time. So get a move on. Compare your VHI plan with what is on offer from the other health companies -- and if one of them offers you better value, don't delay, switch today.