Sunday Times MoneyComment - December 18, 2011

Posted by Jill Kerby on December 18 2011 @ 09:00

Another rise in health insurance levy is just a sick joke


Late in the afternoon of New Year’s Eve, when many of us are just starting to prepare for a night out with friends and family, the Health Insurance Authority usually announces another hike in the subsidy that every private health insurance member must pays to the VHI, the loss-making state-owned insurance provider.  Last year the private health insurance levy was increased by €20 per adult to €205 and €11 per child member to €66. It started out at €160 and €53 in 2008.

This year’s increase will be on top of the insurer’s usual double digit premium increases for 2012, some already announced but with more to come as the progresses. 

Will the multi-million levy save the VHI in 2012 and turn it into a vibrant, efficient, value for money, cost effective insurance company, also finally complying with all the usual reserve requirements demanded by the EU of the other insurers?

Of course not.

The VHI will remain the sick child of its disfunctional parent – the Department of Health, and it will continue to be one of the significant threats to the entire health sector, both public and private and especially to the notion of community rating of premium payments. 

As I have written many times before, the VHI should have been broken up, privatised and sold off when the decision was taken in 1996 to end its 40 year monopoly.  Now, as we enter the fourth year of the Great Irish Depression, and membership numbers are haemorrhaging, what corporate investor would ever buy the VHI – even broken up and privatised?

To make matters worse, Dr James Reilly, the Health Minister proposes all sorts of mad treatments for both his sick child and the private insurance sector including that the loss-making VHI, still by far the largest insurer buy Quinn Health, which is up for sale.


Do we even still have a competition authority anymore to question such a proposal? Remind me to ask Ajai Chopra the next time he’s in town.

Dr O’Reilly is also proposing that, in spite of the extra charge that the private ensures will have to pay – again – for private beds in public hospitals, the insurers will have to pay for any public beds or trolleys that their members occupy because all the private ones are full, if they happen to find themselves involuntarily checking into a public hospital, say after being hit by a car, or having a heart attack. 

So much for everyone in the state having access to public hospital beds and other services through the taxes they pay into a state system in which 60,000 people are on waiting lists, some for as long as 30 months.

The consequence of this ‘reform’, if it happens, will be even higher premiums for private health insurance, and more people dropping their membership, say brokers who specialise in providing health insurance advice.  Over 50,000 have already done to the end of September and the brokers expect that figure to rise to at least 70,000 cancellations by the end of this year.

The economic collapse means that Ireland’s intertwined two-tiered health system is no longer sustainable. These kinds of unilateral double charges, on top of the huge medical inflation costs the insurers say they must pass on, suggests to me that in the relatively near future only the very well-off will be able to afford private medical care.

Until Minister O’Reilly’s dream of universal health care becomes a reality, and I doubt if it will happen for a very long time, the existing, shrinking public health service and hospitals will be swamped by ex-health insurance members joining those horrific queues.


Last Christmas

Does the fact that we are the second highest spenders at Christmas reflect our natural generosity and our long standing tradition of living beyond our means – at least until the credit card bills arrive – or just the fact that some people still have a great deal of savings and will be dipping into them again this year?

According to last week’s Economist magazine, we will come third only after Luxembourg and the United States for the amount we will spend on Christmas presents this year – about $690 (€531) compared to their approximately $780 (€601) and $720 (€555) respectively. 

Compared to the huge Christmas spending in the past, that €531 looks pretty modest, to be honest but the Economist believes we are “big givers,” compared to our “PIGS companions: Portugal, Greece and Spain”. Only the Spanish will spend more than $500 (€385).

The Dutch are the most parsimonious present givers, coming in at under $200 (€154); even our German grinchmeister’s spend more - about $350 (€270). 

Doesn’t sound like there’s much ‘ho ho ho’ in their holidays, does it?  Given how German we’re all going to have to become in 2012, let’s enjoy our last all-Irish one for whatever it’s worth.


Golden opportunity

I don’t have a crystal ball, but I keep getting asked if I think the price of gold is in a bubble and about to collapse, or if its price will keep rising, as it has every year since 1999. (See the charts at www.goldprice.org)

I don’t think gold is in a bubble, but I do think its price will go up and down and repeat that sequence until the global debt crisis is over, governments stop debasing their currencies and start balancing their budgets, unemployment starts reversing, economic recovery is genuine and ordinary Irish people are hopeful about the future again.

Buy on the dips. 

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