WITH BUPA due to begin trading in the Irish market tomorrow, the VHI has rejected compromise proposals designed to remove any legal uncertainty about the plans on offer by the British health insurer.
However, there were some signs of optimism by the Government that the controversy about the introduction of a new era of competition in the health insurance market can still be overcome.
Government sources said they were hopeful that outstanding difficulties between the Department of Health and BUPA would be resolved today in last minute negotiations.
BUPA is due to begin trading medical insurance cover from tomorrow, in competition with the VHI, and a failure to agree terms at this late stage with the Department of Health would cause confusion and legal uncertainty about the status of BUPA's policies.
If the present discussions do not resolve questions about the legality of its package, BUPA may face deregistration as a health insurance provider, according to the Department.
However, the deregistration procedure would take several weeks, and, BUPA would be able to operate in the meantime.
The discussions centre on whether the two products offered by BUPA - the basic Essential Plan, which is community rated and offers semi private hospital accommodation and medical treatment to everyone, and the various cash plans, which are age rated and provide cash benefits per night in hospital - are an integrated package or not.
Negotiations with the Department, which is the regulatory agency for all medical insurance, made some progress yesterday. It was indicated that a resolution to the difficulties may be found through BUPA offering its "essential" and "cash" plans to customers as separate insurance products and on different pieces of paper.
Last night a spokesman for the VHI described such a proposed resolution as "merely a cosmetic exercise" which would not eliminate "the patently clear legal problem that exists".
He said that the BUPA "essential" and "cash" schemes "are inextricably linked." From the outset "they were designed to be so structured", he said.
In a letter published in The Irish Times today, Mr John O'Connor, a VHI director, said that if the Minister for Health, Mr Noonan, allows the BUPA cash plans to proceed, "he will in due course have on his hands a social and financial nightmare, arising from the crippling of the VHI and the unloading of a huge population of people over 50 years of age on the State health system."
He invited Mr Noonan to think the matter through. "I know he is bloodly busy," he said, "but I don't want to hear the mantra `I didn't know' being chanted when the damage is done."
The Fianna Fail spokeswoman on health, Ms Maire GeogheganQuinn, shares the Minister's concern about the legality of BUPA's product. "I am very concerned that the cash plans are outside the law, which is why I raised them in the Dail 10 weeks ago," she said.
You can't compare like with like between the VHI and BUPA, as the VHI plans are community rated all the way though. The Minister has to decide on this very quickly," she said.
Meanwhile, the VHI has said that it received legal advice that BUPA's cash plans contravened the Health Insurance Act, and in the light of this it was "considering its options". A spokesman for VHI refused to elaborate on what the options were, but stressed that VHI would do all in its power to defend community rating.
A spokeswoman for BUPA said that they were quite separate packages, and that people could buy either one without the other.
At the moment, the two BUPA, plans are offered on the same application form and the VHI statement pointed out that taken together they correspond exactly to the shortfall between the benefits on the Essential Plan and the rates per night charged by the different hospitals.
The BUPA spokeswoman expressed confidence that the problems would be resolved very soon. It is likely that a resolution, if it comes, will involve the separate marketing and sale of the two types of plan.