Health insurance - Victimising people is unacceptable
Reflecting the current state of turmoil in the health insurance business, the impending EU action has been triggered by a complaint from VIVAS, a private health insurance company which recently entered the Irish market.
The latest development is not connected to the crisis created by BUPA’s decision to withdraw from the market, a precipitous move which has left the British company’s 470,000 Irish customers facing an uncertain future. Regrettably, they are the unwitting victims of a row over the controversial risk equalisation scheme which is now raging between BUPA, VHI, and Health Minister Mary Harney.
If it goes ahead, the EU initiative could shake up the market, bringing a welcome reprieve to long suffering customers. As in so many areas of Irish life, the average punter is being denied the benefits that would flow from genuine competition in a field where the State-owned VHI group controls over 80% of the health insurance market.
It is somewhat ironic that the commission action is being taken by ex-Kildare TD and former Finance Minister Charlie McCreevy. When he was dispatched to Brussels as Ireland’s EU Commissioner by Taoiseach Bertie Ahern, the widely held perception was that he had been shafted politically.
However, in his new role Mr McCreevy has considerable powers. Effectively, the process now under way may result in bringing Ireland before the European Court of Justice. If that happens, the Government could be forced to restructure the VHI.
If Mr McCreevy opts to go down that road, and hopefully he will, it could have the effect of opening up the market to greater competition.
The abuse in question relates to a derogation granted to the VHI when other insurers were required to put aside a reserve cash to ensure they could underwrite their business. A condition of that exemption, which runs to 2012, insisted on VHI confining itself to its core business.
The upshot of the VIVAS complaint is that the commission is now accusing the country’s biggest health insurer of engaging in other activities.
Simply put, it is being charged with breaching the terms of the directive and going outside the strict boundaries of health insurance by running online retail stores, offering travel insurance and operating a primary care clinic.
A draft letter to this effect, which has just been prepared by Mr McCreevy is expected to land on Ms Harney’s desk next week.
Meanwhile, the state of confusion permeating the health insurance business grows deeper by the day as uncertainty grows among BUPA subscribers.
Under the controversial risk equalisation scheme, which has been vindicated in the High Court, BUPA was to give VHI €160 million over the next three years, using profits from its younger and healthier customers to subsidise the cost of older VHI clients more likely to claim insurance.
Meanwhile, thousands of BUPA customers, whose insurance cover was up in January, had their annual subscriptions renewed because renewal notices were posted in advance of the December 14 decision to pull out of the Irish market. However, thousands of other subscriptions are not being renewed.
The company, which has a 300-strong workforce in Fermoy, says it would stay if risk equalisation were changed and became profitable. It is completely unacceptable that 470,000 people should be the victims of a poker game for control of Ireland’s lucrative health insurance business.
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