The Minister for Health has said he is very concerned by reports that the VHI has begun imposing a €50 fee on customers who cancel their health insurance half way through the year.
Dr James Reilly said he does not agree with the move, but added that the VHI is a commercial semi-State company.
The minister said everyone knows that the VHI's dominance in the market is creating problems and said this does nothing to address the situation.
He would much prefer to see the VHI address its cost base rather than penalise customers who choose to move, he said.
Dr Reilly said he would certainly be looking into it, but was unable to say what action he might take.
He said customers had been hit hard already by huge premium hikes and by a failure to address the company's cost base.
He acknowledged that some good work has been done in the last year or two and he commended the outgoing chief executive, Jimmy Tolan, for that.
However, he said there is a long way to go and the cost base in our health service, particularly in the private sector, needs to be addressed.
Dr Reilly was speaking to RTÉ News after addressing a patient safety conference in Dublin.
Meanwhile, the National Consumer Agency has questioned the legality of the VHI's decision to start clawing back the government levy it pays on behalf of its customers, when they cancel or change their policies mid way through the year.
The NCA says it may be illegal because the levy was placed on the industry, not on individual policy holders.
It estimates that if a family of two adults and two children were to cancel their policy four months into the year because they could not afford it, they would be hit with a clawback by the VHI of €360.
The NCA is to meet the VHI next week to discuss the issue and to ask it to justify the imposition of a €50 administration fee on customers who cancel or switch their policies midway through the year.
