Govt to consider VHI break-up in wake of BUPA departure

The Government is reportedly set to consider the break-up of the VHI following BUPA's decision to exit the Irish health insurance market.

The company announced yesterday that it was closing its Irish operations due to the introduction of so-called "risk equalisation".

Under the measure, BUPA claims it would have to pay the VHI more than €160m over three years when its profits for the same period would be just €60m.

Reports this morning say a Competition Authority report due to presented to Minister for Health Mary Harney shortly would recommend the break-up of the VHI in the interests of competition.

However, the move could prove very complex and could involve the scrapping of the VHI brand.

Ms Harney has already ruled out any review of the risk equalisation scheme, saying it is necessary to ensure that older people and sick people can afford health insurance.

The VHI has generally older and less profitable customers than BUPA.

Risk equalisation, which would have forced BUPA to compensate the VHI for this situation, is designed to protect the situation whereby everybody pays the same health insurance premiums regardless of their age and health status.