BUPA ruling ‘could spark real price competition’
Irish Consumers’ Association chief executive, Dermott Jewell, said it is now open season for Irish health insurers, to determine who is going to provide the best service at the best price.
But he also warned that the outcome could also be similar to the lifting of the ban on below-cost selling that failed to influence supermarket prices.
“It really depends on whether the insurance companies want to be competitive,” said Mr Jewell.
In the High Court yesterday, Mr Justice Liam McKechnie dismissed BUPA Ireland’s claim that the risk equalisation scheme was anti-competitive and illegal.
Justice McKechnie said BUPA entered the market knowing that a regulatory framework already existed.
The decision means that the British-based company will have to pay €161 million to subsidise the VHI’s older customer base over the next three years.
It is understood that VIVAS Health, the newest entrant to the market, with more than 80,000 customers, will not be obliged to contribute until January 1, 2008. For the first year, it will only be obliged to contribute 50% of the amount it is liable for.
Health Minister Mary Harney said the High Court’s decision confirmed that the Government was entitled to introduce risk equalisation.
She said it was Government policy that health insurance cover should be available to people of all ages without price discrimination.
BUPA Ireland, which has 460,000 customers and threatened to pull out of the Irish market if risk equalisation was introduced, said it was a dark day for the company and its customers.
BUPA Ireland managing director, Martin Daly said the elimination of real competition could only be avoided through Government intervention, and he was seeking an immediate meeting with the minister .
VIVAS Health said it intended staying in Ireland, despite the High Court ruling but has called on European Commissioner for the Internal Market, Charlie McCreevy, to intervene, to bring some balance to the health insurance market.
The VHI, which has 1.55 million customers, said prices were unlikely to drop but that risk equalisation would curb their rate of increase.
VHI chief executive, Vincent Sheridan said the insurers competitors would now be forced to compete right across the market and become more innovative in terms of cost and product.
The High Court is to decide a date early next month for a second judicial review hearing on the timing of Ms Harney’s decision last December to trigger to risk equalisation in January 2006.
