Harney urged to call Bupa's bluff

ALMOST 400,000 Bupa customers and employees face uncertainty after a threat by the health insurer to pull out of Ireland over new regulations it says will favour its rival, VHI.

The threat was dismissed by health service union Amicus as a "childish tantrum" while Labour described it as a "crude attempt at blackmail".

Both urged Health Minister Mary Harney to call the company's bluff by implementing new rules which were formally recommended yesterday by industry regulator, the Health Insurance Authority.

Bupa would not confirm it had made the threat, contained in a leaked document meant as a confidential submission to the HIA.

But the company offered no reassurance to its 200 workers or 374,000 policy holders about its future here. It also re-stated its opposition to the regulations and said they were an "absurdity" that would make competition in the Irish market "impossible".

Bupa's anger is over a recommendation that a long-threatened system of "risk equalisation payments" be introduced.

British-owned Bupa entered the Irish market in 1996, ending VHI's monopoly on health insurance and attracting younger customers than its rival.

Older customers make claims more often and for larger amounts than younger ones, so are more costly for companies to insure but the principle of "community rating" whichapplies to the Irish market by law, means all customers must be charged equally.

The result is that VHI's average costs are automatically higher. Under a scheme of risk equalisation payments, Bupa would have to pay VHI an annual sum to even out their gains.

Bupa, which is taking court challenges here and in the European Courts, has estimated the sum would be €34 million in the first year and rise thereafter, instantly wiping out its profits.

In a statement yesterday, the company said: "It is an absurdity to require Bupa Ireland, with a 20% market share, to pay twice its profits to the dominant State-owned VHI, with 80% market share. We are not there to subsidise our competitor."

VHI chief executive Vincent Sheridan said: "If Bupa want to compete for older members of the market then we could end up paying them and we will have no problem with that. If they have a higher risk profile than we have, we will pay into the fund. There could not be a fairer system."