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Health insurance - Vhi clientele are the ones who lose out-40% of the nation!

IRELAND’S shambolic health service looks set to deteriorate further following the Government’s 20% cut in financial payments by independent health insurance companies to Vhi Healthcare, the State-owned group.

Under community rating, independent companies are compelled to pay risk equalisation to Vhi for its older customer base. Predictably, the decision to reduce compensation by 20% is welcomed by Quinn Healthcare and VIVAS Health. Not surprisingly, they resent compensating a company which enjoys a virtual monopoly in the market.

Much to the dismay of VhI customers, however, Health Minister Mary Harney’s initiative looks certain to result in premium hikes after the measure comes into force in July. The move is one of a series of reforms recommended in the Barrington Report which also proposed loading the policies of people who take out health insurance late in life.

With the cost of insurance soaring, older subscribers will have to fork out even more for private cover. According to Vhi, the Government’s move will result in much higher premiums. It also forces the company to accelerate its build-up of financial reserves.

Politically, these are risky times for the administration. With the general election only weeks away, radical changes on the health insurance landscape could backfire on the Government which rushed the community rating reduction through the Dáil in 30 minutes yesterday.

One way or another, the unfolding scenario looks certain to damage Ms Harney whose image is already being hit by the ongoing row with nurses who are demanding a 35-hour week and a 10% pay rise.

But while public sympathy lies with the nurses, there is little support for hospital consultants and she stands to gain popular support in her power struggle with consultants. They oppose the minister’s reforms aimed at remedying this country’s two-tier health system in which private patients are fast-tracked and receive a far better quality treatment than those who rely on the public system, where they have to wait interminably for treatment or a hospital bed.

Seizing the political high ground in the insurance debate, Fine Gael and Labour claim the only certainty in this unfolding scenario is that premiums will begin to rise rapidly. However, Ms Harney argues that her initiative will increase competition by encouraging more insurance companies to do business here.

Closer to the bone, Socialist TD Joe Higgins suggests it is payback time for Quinn Healthcare in return for bailing out the Government. This refers to its takeover of BUPA’s Irish business after the UK-based group pulled out of the Irish market, leaving thousands of customers in limbo and hundreds of workers facing redundancy.

Its departure was triggered by the Government’s community rating policy which required independent insurers, who tend to have a younger customer profile, to recompense Vhi for its older, less healthy and more costly, client base.

Within hours of taking over BUPA, the Quinn group, which has close links with Fianna Fáil, threatened to take legal action over the controversial community rating policy.

With the health insurance mired in uncertainty, the Government was forced to move swiftly to close off a loophole which would effectively give the Quinn group a reprieve from risk equalisation payments.

Following Ms Harney’s ground shift on the vexed question of compensating Vhi, the privately-owned insurance company is seeking further concessions, complaining that the 20% cut is not enough. For tens of thousands of Vhi customers, this is an appalling vista.