Dara Gantly caught a shocking glimpse of Ireland in 2025 last week while digesting the latest annual returns of Vhi
It was a very short sentence: seven words in total. But when the Chief Executive of Vhi Healthcare said it at last week’s press conference to announce the insurer’s 2009 annual report, I sat up and took notice. “Vhi today is actually Ireland in 2025,” said Jimmy Tolan.
This is not the kind of thing one necessarily wants to hear from a company that generated an overall deficit after tax of €41.7 million last year, and which will need anything between €200 million and €300 million in the form of State capital investment to get its solvency ratio in line with Financial Regulator requirements once authorised — not to mention the uncertainty over privatisation plans. But what the Vhi had to say made complete sense.
The insurer finds itself with 22 per cent of its customers currently over the age of 60 and it loses €170 million in meeting their healthcare needs. It has a healthy 62 per cent market share, but actually funds approximately 80 per cent to 82 per cent of the healthcare spend within the market. And due to the age and health status of its customer base, that healthcare funding gap will grow further in the years ahead. One startling figure reveals that while Vhi is five-and-a-half times the size of Aviva Health, its cancer care and cardiac spend is 25 times the level of its competitor.
So, is this what Ireland Inc has to look forward to? By 2020, the Department of Health expects the number of individuals with chronic conditions will increase by 40 per cent. There will be a 50 per cent increase in chronic heart disease; a 48 per cent increase in strokes; and a 62 per cent increase in diabetes, particularly type 2 diabetes. Between 2005 and 2035, the overall number of invasive cancers is projected to increase by 6 per cent annually for females and 8 per cent annually for males.
By 2025, individuals are expected to live twice as long with chronic conditions, but have twice the number of conditions. And Ireland is going from having one of the lowest numbers of people over the age of 65 to hitting the OECD average in the next ten years.
Then the Vhi CEO said something else, which again made me sit up, but was also not picked up on by a general media naturally preoccupied with expected 7 per cent increases in premiums over the next decade. What Tolan said was that Ireland’s annual healthcare spend could reach €37 billion — given an ageing population, increases in chronic diseases and anticipated economic growth and inflation. The Government’s total tax revenue is currently about €34 billion.
What the Vhi, the Government and indeed all of us have to do to address this impending crisis is unclear. But let’s have the debate. Community rating is one thing, but more fundamental reform is required. Letters welcome.
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