Sir, - Your correspondents in the letters page (December 31st) are misleading the public about BUPA. It is by no means certain that, even in the absence of competition from BUPA or anyone else, community rating is a long term stable proposition. The tendency for VHI costs and premiums to increase at a multiple of the inflation rate is due in part to the ageing of the population, but more particularly may be due to the even more rapid ageing of the VHI customer base (could we have information on this?).
The introduction of free consultant and public hospital care a few years ago may be an important contributory factor, as it is easy to see how young, low risk customers may be less inclined to pay VHI premiums and may opt to hop on board the system in their middle age as their risk increases and as their finances improve. In many western European countries health insurance is effectively community rated but is also compulsory, a reflection of this instability.
Community rating of course is incompatible with unrestrained competition, hence the restrictive provisions of the Health Insurance Act. The same Act also, provides for an equalisation find, so that if arrival to the VHI secures a customer base with more favourable (i.e. younger) age structure, a transfer is made towards less favoured insurers, thereby ensuring an element of stability in the system. As a member of the VHI Board, surely Mr John O'Connor was aware of this when making his somewhat apocalyptic forecasts of the impact of BUPA's plans on the VHI, in which case he is misleading and scaring the public.
The advent of BUPA should force some hard thinking on community rating. I fear it will instead be met by the usual head in the sand approach from politicians and other public commentators. Incidentally, as it seems to be de rigueur to declare one's interests in this correspondence, let me state that I have over 25 years of VHI subscription behind me, so community rating at this stage of my life is in my personal interest. But competition is also in my and everyone else's interest if it shakes up the VHI and makes it customer friendly and innovative instead of whingeing and indulging in alarmism - Yours, etc
Pinewood Park,
Dublin 14