BUPA withdrawal – Healthy competition is needed

It was, indeed, regrettable that BUPA decided to withdraw from the Irish market as Taoiseach Bertie Ahern said yesterday, but it was also important for competition that the Government deliver on its promise to put the VHI on a commercial basis.

That will not be for at least six years because Government legislation envisages that the VHI, apart from being independent and competing with other insurers on a level playing pitch, will require it to meet minimum solvency levels. The latter issue of solvency is not expected to happen until 2012, so it would appear that it will still enjoy an advantage.

Already, speculation about the break-up of the VHI, which the Competition Authority is expected to recommend, is already opposed by the Amicus trade union which has 800 members in the VHI.

In the interests of fair competition in the health insurance field, and to give customers a greater option, there has to be several companies, and the Competition Authority is likely to recommend four.

While Health Minister Mary Harney recognises, as does the Government, that a near-monopoly situation exists, encouragement must be given to attract more competition to enter health insurance. That competition must allow for risk equalisation, which BUPA quoted as the only reason for withdrawing from Ireland.

Despite that decision, the company is still obliged to pay the State between €8 million and €10 million under the scheme for this year.