The U.S. Government surprisingly raised the levy on all health insurance policies by 40%. As a result of this, around 850,000 people will suffer a stiff increase in their health insurance. If the insurance companies pass on all the increase to its customers, then an average family of 2 adults and 2 children will have to pay up to 220 more for health cover.
Customers are already sore with the huge increases in the health insurance cost. The 40% increase means the levy will immediately go up by an average of 80 for each adult and from 66 to 95 for every insured child.
Since 2009, health providers are compensated by this special charge because the older customers tend to make more claims. Insurers mostly favour young people. Hence to rebalance the market, this increase had to be introduced. Many insurance companies, who were surprised at the scale of the increase, are likely to pass on the cost to its customers.
The levy is a way of ensuring everyone pays the same price for the same policy, irrespective of age and health. Initially, it is paid by the insurers, who in turn have increased prices to help recoup their costs. Since its first introduction, the levy on an adult policy has now gone up by 78% because of the latest rise. Thousands of families have already been forced to give up health insurance due to spiraling prices.
Over the past 2 years, health insurance cost has jumped by around 50% for an average family. Last year, 53,000 people gave up their health insurance cover as they found it difficult to make ends meet. Most of the people who gave up their health insurance cover were young people, who were less likely to make claims.
This is putting pressure on insurers and this is a main reason why the levy was increased so as to help cover the costs of older clients. But insurers were taken aback by the size of the increase in levy, which is 4 times greater than the increase imposed last year.
Most of the money raised from the levy ends up with the state-owned VHI, because the VHI insures the majority of over-60s who have health insurance. Almost a quarter of its customers are over the age of 60.