Newspaper Article

Idea of subsidising VHI is absurd ; The Risk Equalisation Scheme threatens all competition in the health sector

O'Rourke, Martin

2004

Overview

The Third Non-Life Directive was intended to provide for competition, but meaningful competition in the health insurance market cannot emerge if a system is introduced whereby the VHI receives several millions of euro in the form of a subsidy from its only competitor, BUPA Ireland. This subsidy scheme, if implemented, would threaten what little competition there is and put the cost of health insurance beyond the reach of many families. BUPA Ireland opened for business in 1997 and brought competition and a distinctive value proposition to the market. Consumers, including VHI members, have benefited significantly in terms of greater choice, new products and benefits, and consistently lower prices. As a result, the market has expanded rapidly with nearly 50 per cent of the population choosing to be insured. The public can draw its own conclusions as to why a measure whose usefulness has never been demonstrated is being so vociferously sought. The fact remains that this subsidy, if implemented, would ever only go one way - from the private to the State sector, protecting the VHI from competition in an open market. So, no new entrant can grow and develop to a point where it could be a real competitive threat to the VHI.

• Publisher: The Irish Times DAC