Press Release

Statement by the Minister for Health and Children re VHI Increase

The Minister for Health and Children, Mr. Micheál Martin, TD, today (17 July) announced that he has completed his consideration of the Voluntary Health Insurance Board’s decision to implement a premium increase of 18% on all plans, to take effect from 1 September 2002.

The Minister has formed the view that it would not be realistic to veto the increase involved, while expecting VHI to maintain benefit levels/provider coverage, cater for increased claims volumes/increased treatments & technology and maintain the integrity of its finances..

In forming his view the Minister has noted the following factors in particular:

  • the increase sought (18%) is less than the forecast increase in claims (20%);
  • despite the level of the increase, the VHI´s reserves ratio is forecast to deteriorate and reserves will continue to be below industry norms;
  • the volume of claims continues to increase and must be funded;
  • any reduction or deferral of the increase would have a serious impact on VHI into the future and the potential impact of this on services to its members;
  • the need for the Board, in the interests of its members, to retain the level of services in private hospitals, where price increases considerably in excess of levels granted in previous years are necessary for that purpose.

In conjunction with his consideration of the price increase, the Minister noted that VHI´s administration costs are already receiving attention by VHI. Its current expense ratio is within those of insurance companies generally and compares favourably to those of health insurers in other jurisdictions.

The Minister said that “the picture, which emerges from examination of the information provided by VHI, is that the bulk of extra premium income will go back to the members in benefits paid and there will be a minimal surplus to contribute to reserves. In the longer term, the price increases to private hospitals are also aimed at benefiting members in terms of the availability, standard and quality of care.”

Increase in Payments by Private Patients towards Public Hospital Costs

Increases in payments by private patients in respect of private and semi private rooms in public hospitals and the statutory charges for hospital inpatient services will come into effect on 1 August next. The payment in respect of private and semi private rooms in public hospitals is being increased. Even with this increase the income from these private beds will be less than half the actual bed costs of providing services in our major hospitals. The statutory inpatient charge is being increased by €3 to€36 per overnight or day case, subject to a maximum of€360 in any year.

The inpatient payment is based on the principle that those who can afford to do so are required to make a contribution towards the cost of providing hospital services; this does not interfere with patients’ treatment and care while in hospital. The Minister pointed out that the income raised represents a valuable source of finance for our public hospitals.

Other Measures

Since 1997, there has been an increase of 30,000 in the numbers employed in the health services bringing the total employed to in excess of 90,000. This year, 2002, 6,000 new additional posts have been approved. In this context the Government has decided that, of these 6000, 800 posts (principally made up of management and administrative) will not be filled as a corrective measure. This represents less than 1% of the total numbers employed.

This measure is to be implemented in a way that will have a minimal impact on patient services, including 2002 developments.

The measures relating to bed payments and posts are part of an overall package of efficiency measures decided by Government.