Friday, 15 December 2006
Conor Lenihan (Minister of State, Department of Foreign Affairs; Dublin South West, Fianna Fail)
I am taking the Adjournment on behalf of the Minister for Health and Children, Deputy Harney.
The Minister regrets BUPA's decision to leave the Irish market and, in particular at this time, the loss of jobs resulting from that decision. The Minister, on behalf of the Government, has endeavoured to achieve a solution that would enable BUPA to stay, but would also protect the fundamental principles of community rating supported by risk equalisation. This means health insurance is available and affordable for older people and those with illnesses. The recent High Court judgment upheld the existing regulatory arrangements, including risk equalisation. BUPA's view following the High Court decision was that it could not stay in the market. Following the High Court decision, a meeting between the Minister and BUPA senior management was arranged, and Senator Bradford will take comfort from that. After that meeting, further discussions took place involving senior officials of the Department of Health and Children. Notwithstanding that both sides put forward positions and proposals, it did not prove possible to reach an outcome in which BUPA decided it would stay in the Irish market. The best advice available to the Minister was that the positions she put forward were consistent with BUPA's being able to continue operating in the market and to make profits at a level close to that which it makes in the UK. It is noteworthy that VIVAS is still in the market and has not said it will pull out.
The Government continues to support sustainable competition and consumer choice in the private health insurance market. The Government will also support the stability of the community rated health insurance system and the safeguards provided to protect it, such as risk equalisation. This policy is designed to benefit the insured population, particularly the elderly and the ill, who would otherwise be vulnerable to the effects of risk selection, and would find the cost of private health insurance unaffordable. Risk equalisation seeks to remove an insurer's incentive to select preferred risks. It is clear from health insurance markets around the world that a system of risk equalisation and community rating is not incompatible with viable, ongoing competition. Risk equalisation is not designed to over-compensate any insurance undertaking for the share of the total community of sick and elderly. It is about compensating for differential risk profiles. It is not about transferring profits. It is about ensuring that competition takes place on an equitable basis. It is the Minister's view that the regulatory framework for private health insurance, including provision for risk equalisation, is appropriate, and that it would have been possible for BUPA to remain in the Irish market and make reasonable profits.