GOVERNMENT COMPLACENCY and neglect is at least partially responsible for the insecurity and cost that is now facing Voluntary Health Insurance (VHI) customers in the aftermath of the Supreme Court ruling on risk equalisation. The Minister for Health Mary Harney has admitted to uncertainty as to whether a solution can be found to the difficulties created for the State-owned company and its clients. It is a dreadful mess and it has been years in the making. More than 1½ million people are affected.
The VHI will have to plug a € 40 million hole in its accounts by the end of the year in order to meet new legislative requirements to maintain reserves amounting to 40 per cent of its claims. Ms Harney has ruled out State intervention or part privatisation. At the same time, our system of "community rating", whereby everybody pays the same premium for health insurance, regardless of age, gender or health profile, may be unable to survive without an attendant risk equalisation scheme.
In the past, inadequate medical services and a dual health system encouraged individuals to take out private insurance in order to "jump the queue" for specialist and hospital treatment. More than 50 per cent of the population is now insured, compared to ten per cent in Britain. But if costs rise to unaffordable levels for older and chronically-ill patients because of a failure of community rating, pressure will increase on public services. Already, trade unions are demanding that consideration be given to the introduction of a universal health insurance levy as an alternative system.
Community rating for health insurance was introduced 12 years ago, when the VHI was the only company operating in the State. Provision for a risk equalisation scheme, whereby new companies with a younger, more profitable, customer base would make compensatory payments to the long-established VHI came in 2003, but lay dormant for three years. On being activated, it was immediately challenged by Bupa in the High Court and before the European Commission. Both actions were lost. Bupa was subsequently acquired by Quinn Healthcare which claimed a three-year derogation from risk equalisation payments on the grounds that it was a new company.
The Supreme Court has found the risk equalisation scheme to be based on a faulty interpretation of the law. The outcome has damaged the financial stability of the VHI and raised questions about the competence of Government. The Court ruled that risk equalisation should be based on separate insurance plans rather than on the entire insured population. Last year, Ms Harney questioned the equity of these plans and asked whether people with low or moderate insurance cover should have to subsidise the additional benefits purchased by wealthy individuals. Indecisive handling of complex issues has brought us to this point. A Cabinet decision on the capitalisation of the VHI was to have been taken last December. It didn't happen. Now community rating is threatened. There is an urgent requirement for clarity and leadership.