Madam - May I congratulate Mary Harney on her refusal to bend to the VHI's wish for risk-equalisation payments? This demand flew in the face of a free and open market where the consumer is benefits from open competition, and I believe Ms Harney can be very proud of her decision. I hope she now maintains her stance and refuses to grant the VHI its abhorrent request for a 12.5 per cent increase in premiums.
One of the golden rules of business is that when profits are decreasing, ways should be sought to save money instead of risking customer alienation by recklessly raising prices. As a semi-state body, the VHI's business ethos seems to dictate that the slightest hint of a future financial deficit is quickly and painlessly remedied by increasing prices, instead of operating more efficiently.
It is becoming increasingly obvious that the days of semi-state support are drawing to a close. The model was not working for Aer Lingus in the new era of competitive aviation. The airline was forced to undergo radical and painful change to enable it to "work smarter" and offer lower fares. It was the right thing to do.
Similarly, the model is no longer working for the VHI. Painful as it may be in the short-term, it now needs to reinvent itself as a slick and efficient operation that can compete effectively with everyone else.
- Yours, etc,
GERARD REYNOLDS, Knocklyon, Dublin 16.
Madam, - The Minister for Health has refused to introduce risk equalisation against the advice of her own health insurance adviser, the Health Insurance Authority, the York Health Economic Consortium which prepared a report for the authority, and FGS consultants, which advised risk equalisation in its report for the Amicus trade union.
One of the world's greatest proponents of competition in healthcare, Professor Alain Enthoven of Stanford University, indicated in his seminal paper on the history and principles of managed competition in healthcare in 1993 (and reaffirmed in 2004) that subsidy or risk equalisation of high-risk insurers - for example VHI - was a sine qua non of competition in a health insurance market.
The Minister says risk equalisation is not appropriate as there is currently insufficient competition in the market place. She clearly believes that competition, like privatisation of our health system, can only benefit the healthcare consumer. It is deeply regrettable that the Minister could be so ignorant of the experiences of other nations in this area.
The United States introduced competition in healthcare in the 1960s in the expectation that this would help control costs.While there was some initial success, competition has been a failure because the principles of managed competition, including risk equalisation, were not embedded in the marketplace. Health insurance premiums in the US are set to rise about 20 per cent this year.
The Minister wishes to have a similar competitive multi-payer insurance market here, but a leading research group from Harvard University has recommended a single-payer insurance system, similar to that in Canada, for the US. This system has been generally successful in keeping costs under control in Canada and allowing equitable healthcare for citizens. Competition in healthcare and health insurance in Sweden and Australia respectively has not resulted in lower costs for governments or consumers.
This Government's increasing support of the private health industry and its belief in the competitive insurance agenda will result in more expensive healthcare, higher insurance premiums and increasing inequality. We are headed into troubled waters. - Yours, etc,
Dr JOHN BARTON, Chairperson, Health Services Action Group, Ballinasloe, Co Galway.
