The introduction of the risk equalisation scheme in the health insurance market would be a barrier to trade and would hinder European treaty freedoms, counsel for private health insurer Bupa has argued before the High Court.
Paul Sreenan SC said Bupa is exercising treaty freedoms and risk equalisation would hinder or make them less attractive.
He said the scheme was a disguised restriction on the freedom to establish and provide services guaranteed under the European treaty. The only party to benefit would be the VHI,while the party that would have to pay the expense would be Bupa, he said.
The scheme would have a prejudicial effect on Bupa's business and was a "manifest obstacle to its business", counsel argued. European law did not permit any measure which would prevent an entrant in the market from exercising its treaty freedoms.
Counsel also said under European law, Ireland must protect the competitive model of economic activity and promote rules of competition. It must not adopt, through State measures, rules which are anti-competitive or measures which result in anti-competitive effects.
Mr Sreenan was continuing submissions on the fourth day of the hearing in which Bupa Ireland Ltd and Bupa Insurance Ltd are challenging the legality of the risk equalisation scheme under Irish and European law. Bupa is claiming that the imposition of the risk equalisation charges is an interference with the right to private property in the Constitution and is a barrier to their business.
Bupa claims the scheme is contrary to Articles 43 and 49 of the EC treaty as it limits their right of establishment and the freedom to provide services. The State claims the scheme is constitutional and in accordance with European law. Minister for Health Mary Harney said on December 23rd last the scheme would start on January 1st.
Bupa claims it will have liabilities of €161 million over three years and would be forced out of the Irish market if the scheme is introduced. Mr Sreenan also told the court the scheme, which would involve Bupa paying a subsidy to its main rival, the VHI, to compensate for the VHI having a greater number of high-risk, older and more expensive subscribers, would expose Bupa to losses of €11 million this year. The case continues on Tuesday before Mr Justice Liam McKechnie.
