BUPA bluff was just too big a risk

SINCE it entered the Irish market, nearly 10 years ago, BUPA Ireland insisted it would never accept the imposition of blanket risk equalisation.

People said they were bluffing.

Even the Government thought they were bluffing when it took the case to the High Court.

They still believed until yesterday that, even when BUPA’s case in the courts went against it, the British group would never pull out of Ireland after it had worked tirelessly to capture 475,000 clients or 22% of the voluntary health insurance market.

Now that the company has taken the unprecedented step of pulling out of the Irish market and ceased writing new business from today, the Government has succeeded in throwing the market into turmoil.

The Government has succeeded in driving a highly responsible and successful company, operating for 10 years in this economy, out of the marketplace.

It is more than a touch ironic after the High Court ruling that imposed €161 million in costs on BUPA to ensure older persons got health cover at the same rate as younger people.

It seems a fair argument, but the manner and timing of its introduction has thrown this market into turmoil.

BUPA has now gone and up to 300 jobs have been put at risk.

This is a first in the history of the modern State. It is the first time that a company offering good employment and a competitively-priced product have been driven out of the country by the Government’s blind spot on risk equalisation.

In a further twist to the story the EU’s Internal Market Commissioner, Charlie McCreevy, has threatened legal action against the Government over its failure to restructure the VHI and for its introduction of risk equalisation.

He warned also the European Commission could initiate an investigation into unlimited guarantees that the VHI enjoys from the State.

Ironically, in a letter to Health Minister Mary Harney, his former colleague, Mr McCreevy spelt out his concerns.

It seemed to him that VHI is not subject to the same regulatory conditions as its competitors, he told Ms Harney, and he also requested to see the full High Court judgement in the recent risk equalisation case.

‘‘I am aware that the current unsatisfactory situation of the VHI has been built up over many years now prior to you assuming responsibility for health. However, this is now becoming acute and for which remedial action by the Irish authorities is necessary,’’ Mr McCreevy said in a letter last week to Ms Harney.

It is ironic too that both Mr McCreevy and Ms Harney were the two Government ministers who pushed hardest to limit the State’s involvement in the economy to allow the free market full flight.

They slashed capital gains tax when it wasn’t needed, enriching the property speculators and cut corporation profit tax to 12.5% for all companies, spawning a huge boost in the net worth of thousands of privileged individuals.

They believed that those who worked hard and took risks deserved to be rewarded.

However, by insisting that risk equalisation be introduced at this stage the Health Minister and the rest of the Government have left 475,000 Irish citizens in an uncertain state about their health coverage and put up to 300 jobs at risk.

The upshot of this is to cut the number of players in the health insurance sector from three to two and the chances are citizens generally will end up paying more for their health cover at a time when the service is pretty dismal anyway.

On the basis that if those who were getting a better deal face higher charges from today on for their private health cover, they may well think again.

Countless numbers do not get the kind of health service they pay for because of shortage of beds and the lack of specialists in key areas.

It would be interesting to find out if people with private cover live longer than those without, and it would be equally interesting to find out how any with private cover get access to the kind of services they pay for every year.

It is probably easy to make the case that the private health insurance cover is delivering as bad value to the consumer as is the health service, and this latest fiasco is just a sorry reminder of how inept this Government is on all aspects of healthcare.

With BUPA gone, there is a good chance that those who decide to keep their health cover will migrate to the VHI, installing it as an even bigger monopoly that it already is.

The only remaining player in the sector is Oliver Tattan’s VIVAS.

An infuriated Mr Tattan called for a “new Government strategy” to deal with the current crisis.

“Swift action was required to protect consumers of private health insurance in Ireland in light of this latest development,” he said.

But thanks to a poor Government gamble, VHI is now perfectly positioned to kill all competition in the private health insurance market.