Is the private health insurance industry model 'broken', as the VHI boss Jimmy Tolan has suggested? Have older people been priced out of the market as a result of the latest price hikes?

Is the private health insurance industry model 'broken', as the VHI boss Jimmy Tolan has suggested? Have older people been priced out of the market as a result of the latest price hikes?

Money Express with Jill Kerby in association with Aviva

While a rise in your health insurance costs are probably on the cards no matter which of the three insurers you belong to, VHI's shocking announcement that it will increase premiums by 15%-45% goes much further than it not having sufficient premium income this year to meet the cost of servicing their disproportionate number of older members.

At the heart of the problem is that VHI remains under the ownership and administration of the second most dysfunctional department of government (after the Department of Finance) – the Department of Health.

Despite last May's announcement that the company would be privatised and sold off within two years, most likely at an additional cost of about €350 million to already beleaguered taxpayers, no reform has taken place.

No structural reform – to reduce staff numbers, cut pay and pensions – have take place despite the continuing loss of membership and VHIs inability to meet reserve requirements.

Instead, the health levy has gone up – it now costs €205 per every adult and €66 per child member but the €55 million subsidy to the VHI is still not sufficient for it to meet its claims.

Nor will doubling the price of popular plans like Plan B and Plan B Options and increasing all the others by c15%-25% be sufficient to sustain the VHI long term.

Older customers are intentionally being priced out by the company and should switch, though stay with the same level of plan if they have a pre-existing medical condition.

All health plan members should review their policies with the help of a fee-based insurance advisor who will diligently look at the plans of all three companies and not just recommend Aviva plans because Aviva is the only one who pays commission. Aviva is extremely competitive, but you should still have a look at should also be considered.

For that fee the advisor will make sure you are in the correct plan - most people are not. They'll help you with any paperwork if you switch from one company to another and tell you how to collect your refund.

Dermot Goode ( is one of the best known fee-based advisors: "Even if you stay with VHI, you should cancel your existing policy before the end of January and then renew it immediately in order to lock in 2010 rates before they change on February 1. VHI corporate plans will probably go up in April."

Quinn and Aviva customers, even those in group schemes, should cancel and go onto an individual plan at 2010 rates.

Goode also recommends that everyone switch to the equivalent corporate plan, which you are within your right to do under Community Rated pricing. "The providers won't necessarily make it easy for you to do this", says Goode, but the savings can amount to up to 40% and you can check the Health Insurance Authority website to find the corporate equivalent of your plan.

Another way to lower your cost is to drop any stand-alone outpatient benefit plan, like VHI's 'Day to Day' and save hundreds of euro. Goode again: "If someone is under age 55 ends up with a condition that is going to result in lot of visits to the GP or consultants, x-rays, etc, you can call your broker the next day and renew the day to day cover from that day. It's as easy as that."

All three providers have introduced free cover in the past year for children under 18 who are included under popular family plans. Yet families who were already on those plans before the offers were introduced may still be paying for their children. Cancel and renew – at the 2010 rate - AND get the children free for 2011, says Goode.

Even if you do switch from the uncompetitive VHI, many people could still find the cost of their equivalent Quinn and Aviva plans are still going to be too expensive.

The danger of simple dropping down a plan, without carefully checking the benefits, is that the low cost entry plans are often inadequate now that so many hospitals are cancelling elective surgery and treatments and where private beds are very few. You will still be able to jump the queue to see a consultant, but after that, you join a long waiting list.

If none of these cost cutting options work for you, you may still be able to afford a healthcare cash plan for the whole family form the likes of HSF (see that will pay you and each member of the family a tax-free cash payment for an assortment of treatments, from GP and consultant visits, daycare and in- hospital stays, dental and optical treatment and even maternity grants.

No one knows what's going to happen to the VHI or the health service in the near future, but the picture is already grim.

Private health insurance has never been so essential as the HSE budget is cut by nearly €1 billion. Act now to mitigate 2011's higher costs.

Get better healthcare for less in Offaly. Call Aviva

at 057 86 95300