What to do when asked to pay stealth tax that's jacking up your health cover

Two sneaky stealth taxes are behind the 10% rise in health cover this year - with much worse to come.

Up to last year policy prices had begun to stabilise – and even fall in some cases. Now we’re being hit by a wave of rises in health insurance.

Not only are these price hikes substantial – they are increasingly frequent.

Why? Two simple reasons: the Government's ever-rising health insurance levy and a new hospital charge for private patients that is financially crucifying health insurers.

The health insurance levy is really an indirect tax on consumers that insurers will pass straight on to us.

“Just when you thought it couldn't get any worse for consumers, it has”, said expert Dermot Goode of www.totalhealthcover.ie.

He made this comment after the Government signalled plans to increase health insurance levies on most adult plans by 10% from next April with hardly a peep of protest.

Dermot explained: “This is not just a levy on insurers – it’s a levy on private health insurance customers. As with any levy the health insurers will have no choice but to pass it on to consumers in the form of higher premiums, which means another round of price hikes.

"All of this is on the back of increases of up to 10% on typical premiums over the course of the last 12months”.

Totalhealthcover.ie say the health insurance market has just begun to see some shoots of recovery but that this measure will now lead to more down-grading of cover and cancellations of policies.

The health insurance experts say this could force more consumers back into a public system which simply can't cope with the existing volumes.

In many cases, the levy already accounts for c. 30% of the overall premium. And on some lower cost plans, the levy may account for over 50% of the cost to consumers.

Dermot urged the Government "to stop targeting the private health insurance industry and those consumers who have no choice but to invest in private cover as they can't rely on the public health system!”

The other, even sneakier, stealth tax is the new €1k per night hospital charge for private patients, that patients who come through the public system, through A&E, are increasingly being asked to pay.

The Health (Amendment) Act 2013 provides for the introduction of charges for all private in-patients, including those in public beds (or on trolleys).

Since January 2014, hospitals can charge up to €1000 per night for a private room – and €813 per night for a public ward.

A stay for a hip replacement, for example, could cost an insurer €30,000 if the patient signs the form – compared to €750 previously.

Of course the public purse shouldn’t subsidise medical costs for private patients.

But what these fees are effectively causing is an unfair and misleading stealth tax on people who buy health insurance.

Dr James O’Reilly’s brainwave directly caused recent spikes in the cost of insurance.

And the rich pickings for cash-strapped hospitals are leading to questionable practices.

Patients,who come into hospital via A&E. may be in a confused or distressed state, and are being asked to sign a form waiving their right to free public care if they have private health insurance.

While it’s apparent from the form that the costs of their hospital stay are being billed to the insurer, there’s also a clause that patients are liable for the shortfall in the case of inadequate cover.

So although patients don’t have to pay that exorbitant sum upfront, ultimately they do pay through the ramping up of the cost of their insurance premiums.

And a VHI spokesman confirmed that “there is no indication to suggest that care is being prioritized for those who choose to be treated privately.”

The Central Bank has jurisdiction over health insurers and recently clamped down on dubious practices in the industry like auto-renewals.

But this practice of getting patients to sign forms before they leave A&E also raises ethical issues.

Patients are given the impression that they won’t lose out. But they do – with rising premiums and possible shortfalls in cover.

Some people hope to get a private room if they sign the form– but this rarely happens and experts advise that you can save a lot of money by leaving this unlikely luxury out of your policy anyway.

I don’t blame hospitals for trying to raise funds in any way they can. They need every penny they get as they are generally under-funded, under-staffed and under-resourced.

However, the government shouldn’t try to pull the wool over our eyes and indirectly levy this unfair and surreptitious charge on private health insurance subscribers.

It would be more honest if they simply added a 5% tax on health insurance. But they would never do that because of the political backlash that would inevitably follow.

Racking up the cost health insurance in this dubious way is also hardly going to pave the way for universal health insurance as the Department of Health claims it wants to do.

The Government should fund hospitals properly – not leave them so short of funds that they have to resort to such dubious measures to make ends meet.

So what should you do if asked to sign one of these forms?

Dermot Goode called on patients asked to ask for a private bed first.

Insurer GloHealth urges “patients to only sign a waiver if they are guaranteed to receive private treatment from a private consultant and placed in private accommodation.”

And Laya advised its customers to get in contact if placed under pressure to sign such forms.

The final decision is up to you, but it certainly merits more consideration than it’s getting.