VHI - the Great RipOff Continues

Of all the companies, state, semistate, public and private sector, few have been so persistent and determined in gouging the customer as the semistate VHI. Not happy with fleecing its own custmers while extorting record profits and more or less controlling the private healthcare industry with a vice-like grip, VHI engaged on years of blatant obstructionism in permitting and fair playing field for competition in health insurance, and battled competitiors challenges in courts as far as Europe in order to maintain its massive market share, a perception that it alone treated older customers well, and that its persistent overcharging of lower income customers in order to massively subsidise Fat Cats on its luxury plans D and E is in some way in the public interest. (It took many years for BUPA to successfully challenge the fact that subsidises provided to the state company under "risk equalisation" would in fact end up going to VHI's fund to shore up its loss-making luxury plans - it took many years for the private sector to establish that cross subsidisation should only happen on a like-for-like basis, so that the poor sod who could only afford Bupa/Quinn Essential plan isn't going to end up subsidising some banker fat cat on VHA Plan E).

Its unsurprising in the current climate of the return of the 1980s "Golden Circle" arrogantly still pushed to greater heights than ever before by cronisym and pally cross subsidization of the banking and development industry, while protecting higher civil servants on as much as 8 times the minimum wage from pay cuts whilst cutting disability rates by 8 euros a week, that this kind of protectionism continues to exist.

So its of no surprise that VHI, despite massively haemorraging customers in the last year, instead of reducing subscriptions in order to win back old business and gain new business, is doing exactly the opposite in these deflationary times and raising rates by an average of 8%. It appears that they now wish to punish their loyal customer base for losing 120,000 customers last year, rather than make a bigger effort to maintain business and provide services to those who might have lost their jobs (which would assist greatly the lost customers, the majority of which are probably newly unemployed rather than switchers to the competition, who look increasingly attractive in context of continuous price gouging).

Its astonishing that the government has done little to try to stop this madness, given a commitment to reduce inflation and the cost of doing business in Ireland. A significant level of health insurers business is with corporate employee benefit programmes. These are massively transferring to the competition as VHI's offerings are simply too expensive for corporate buyers. It would make huge business sense if VHI stopped using its muscle to manipulate pricing in the industry and instead tried to do a favour for all consumers.

Comments

dave said…
Shoegirl, not sure what your point is here. There are alternatives now in the form of Aviva and Quinn and customers can readily transfer to these(as they have in their droves). Are you a VHI member yourself who's been "gouged" and "fleeced" or do you subscribe to the view that government should make equal healthcare facilities available to all regardless of means? Those on lower incomes are less likely to have health insurance and those recently unemployed are likely to cancel their insurance and rely on the state, and it's not VHIs role to offer subsidies to these people.
Shoe said…
Dave, my point is that VHI have made little or no effort to drive the costs of private insurance down for their own customers. Instead they forced up prices for their competitiors customers and helped engender a fear of transferring. My parents resolutely refuse to transfer to Quinn or Aviva because like the majority of VHI older customers, they are convinced that only VHI will meet their needs. VHI are happy to allow this misconception to continue as they reap the reward in terms of revenue. Don't even start me on the fact that VHI has historically cross subsidised Plan C-E with its profits from lower cost plans. Don't even mention the fact that VHI still doesn't operate on the same reserves and business regulations as its competitors. Lets not even go there on the fact that it took most of the last decade for the majority of consultants to be "recruited" by the competition (something which actually genuinely WAS a reason to stay with VHI up until maybe 4/5 years ago). Now VHI are not only content to allow misconception and market failure to put them at an advantage, they then persist in demanding cross subsidisation to further hike up their revenues.

My point ultimately, is that the only reason VHI still has a disproportionate level of older clients is that they've persisted in maintaining such a market share for strategic reasons, charging them more and additionally adding revenue from its competitors. The idea that their clientele "cost more" is down to VHI's own strategy in maintaining a climate where its older (and often wealthier) customers are afraid to switch whereas in reality it would be in their interests to do so. It is due to their level of confience in the exploitation of older customers that VHI boldly continue to hike prices. They would not do so on a genuinely compeitive playing field.

For the record, I haven't been a customer of VHI since 2001. Most of the time this was due to working for employers who use BUPA/Quinn, but there was one year where I paid my own costs and it simply was considerably cheaper.

That said, over the next couple of decades, people like me will age within 20 years its probably that the alternative suppliers will have an indentical customer base to VHI. The case for cross subsidisation will disappear in time.

As for your suggestion that VHI should not be obliged to subsised low income earners, why then should VHI itself be subsidised by its competition? Risk equalisation is not merely about age, its also about vulnerability and ability to change supplier. The fact that all suppliers are already obliged to accept most ages and charge the same price is in itself enough to guarantee competition. That older people have chosen to stay with VHI (as I've repeatedly pointed out, out of fear of not getting the same level of cover) should be VHI's problem, not the market's problem.
Lilian said…
Be warned - there is very little that VHI will pay for when the chips are down. They have refused to cover the cost of my scan - an essential part of the diagnosis of my cancer. I thought we had medical cover for when I was really ill which I am but I have had to pay almost €700 and that is on Option D on VHI. I am a senior citizen and was under some illusion that I had medical care cover. Wake up everybody - THERE HAS TO BE BETTER COVER OUT THERE. MY ADVICE IS TO GO ELSEWHERE. VHI are uncaring and I have been "gouged" and "fleeced". Is there no justice in this country?
Shoe said…
Lilian, even I am shocked to hear that. Part of VHI's powerful propoganda machine is the promotion of the folklore that they cover things that other insurers don't. Friends who work in healthcare assure me that this is the case, while my (seniors) parents believe every cock and bull story about Aviva and Quinn customers being refused even basic things.


Maybe it is time to get away entirely from the current model, which really only controls pricing for some at the expense of everybody else, and move to a model that focuses on equity of cover rather than equity of cost. The idea that anybody with a possible cancer could be refused diagnostic treatment is just obscene. The point of my article, however, was VHI's fundamental disloyalty to a customer base who have been naively loyal to them despite the possibility of far better value in the marketplace. It horrifying to realise that VHI are reducing cover while raising premia.

Popular posts from this blog

Bullshittery of the Day award: Abtran

Blowing out the Bosco "AIDS" myth

Jean Byrne's Meteoric Rise