McCreevy threatens court action over equalisation

EUROPEAN Commissioner Charlie McCreevy is threatening to take the Government to court over the favourable conditions it allows the VHI to operate to the detriment of BUPA.

This is the second time Mr McCreevy in his role as Internal Market Commissioner has warned the Government over the rules applying to the health insurance companies in Ireland.

The move comes just two weeks after the High Court rejected BUPA’s legal challenge to being forced to make patient equalisation payments to the VHI.

BUPA, with 15% of the market, said the payments would amount to over €161m in three years even though its profits will be only €64m.

Last week BUPA threatened to pull out of Ireland if the system is not changed.

In a letter to Health Minister Mary Harney, Mr McCreevy said he understood the situation at VHI predates her time in health. “However, this is now becoming acute and for which remedial action by the Irish authorities is necessary.”

His main concern is that the VHI, which holds 80% of the market in Ireland, operates under regulatory conditions that are very different from the conditions that apply to the other operators in the market.

“The Commission has repeatedly been contacted by the other market operators in Ireland who have expressed strong concerns and worries about this lack of a level playing field,” the letter stated.

In addition, the solvency requirements on market operators in Ireland, which are higher than in Britain, adds to the difficulties new market entrants face vis-à-vis the VHI, which does not have to meet these onerous requirements, he said.

The patient equalisation payments are based on the belief that should BUPA lower its rates for younger, healthier members the VHI will lose them and instead be left with older, more costly members.