This Government is pro-competition…
Wednesday, February 21st, 2007Those words, or words to this effect uttered by Mary Harney during the BUPA Ireland withdrawal saga seem pretty hollow with the news that legislation is being rushed through the Oireachtas to end the three year exemption from risk equalisation for new entrants to the health insurance market.
Putting aside the entire “risk equalisation” debate, you have to how the Government can even pretend to be pro-competition with this move. How exactly is the market going to be in any way attractive to potential entrants when they’re burdened with huge payment costs on their business from day one, before they’ve even bagged their first customer?
Surely re-working the legislation to stop new owners of existing companies/customer bases from taking advantage of the exemption would be enough to stop the Quinn Group but keep the market open for others?
Maybe that’s what they’re doing, or maybe there’s more to it than is apparent at present, but so far it doesn’t look as though that’s the case.
Blogs elsewhere
February 21st, 2007 at 9:12 pm
The VHI should be barred from taking on new members and instructed to wind down their business over a number of years - that’s the only way this can be solved.
February 21st, 2007 at 11:18 pm
The VHI should be split up, perhaps with the State retaining only the rump, which could be an insurer of last resort where there is a market failure. Alternatively, an arrangement could be introduced as exists in motor insurance, where a quote has to be offered to those turned down by all insurance companies.
It’s the level of uncertainty that bugs me, and would scare me if I was active in this sector (or any other sector subject to a high degree of regulation). The loophole was known about well before the Quinn/Bupa deal; that deal was announced on January 31st; the Government seemed to be in no rush to plug it … then suddenly it’s an emergency and must be fixed at night so that no-one can camp out at the offices of the HIA …
February 21st, 2007 at 11:53 pm
I agree - there’s an anomaly in the fact that it is supposed to be a free market but the main player is being propped up by the Government - hardly free by my definition.
And yes, the “loophole” was known about, in fact it being described as a loophole by the media is completely disingenuous - it was a core point of the original legislation… the loophole may exist where a new owner of an existing company could benefit from it, but the overall rule was not a loophole by any stretch of the imagination.
February 27th, 2007 at 10:01 am
I think Commmunity Rating could be a red herring. We are basing our approach on studies of American markets but the fact remains that Health insurance in the States is a disaster. Only the rich can afford it and people are cripple with huge medical bills.
The word insurance barely applies to the Health market because insurer and insured both know the risks. The young know they don’t need insurance the old know that they do. The only way to insure equity is some form of compulsory insurance which we already have in PRSI. Competition won’t help we need rethink.