BUPA's entry into Irish market met with accusations of discrimination

THE VHI has accused its new competitor, BUPA Ireland, of taking a cherry-picking approach to the Irish market, following the new company's announcement of its rates yesterday.

BUPA Ireland, the British-owned health insurance company, has been receiving 300 calls a day in the last week, according to its managing director, Mr Martin O'Rourke. BUPA Ireland says it will be quoting rates to potential customers in the next six weeks and taking first premium payments from January 1997.

BUPA's entry into the market represents a major threat to the VHI, which has had its own internal difficulties and is still without a chief executive, following the departure of Mr Brian Duncan in September.

The BUPA policies are based on a basic health insurance scheme, called the Essential Scheme, and four extra payment grades known as Cash Plans to upgrade hospital accommodation.

The company said yesterday the basic rate would cover hospital charges on a range of heart surgery procedures in the Mater Private and Blackrock Clinic hospitals in Dublin.

Mr O'Rourke said the company had agreed lengths of stay with more than 70 hospitals for various procedures. "If the length of stay is three days and you stay for five the hospital still gets the same payment." Mr O'Rourke said this would mean a "swings and roundabouts" scenario for hospitals.

He said the company would guarantee up to 100 days for psychiatric care, and agree a protocol with hospitals for any further care. The VHI cover is up to 180 days.

The VHI responded yesterday to its first competition in 50 years by accusing the company of "a policy of discriminating on age grounds against the Irish public".

In a statement, VHI said the cash plans were "offered to the public on the basis of charges which penalise older people". VHI's medical director, Dr Bernadette Carr, said the cash plan element was "clearly age-rated". She said BUPA's Essential Scheme appeared to be limited to treatment in public hospitals.

She said any discrimination on the basis of age would make health insurance "increasingly unattractive for older people". Any element of risk-rating would force premiums up for older customers, she added.

Almost three-quarters of VHI's 1.4 million customers are on the Plan B rate. This gives semi-private cover in private hospitals (excluding the Blackrock Clinic and Mater Private Hospital in Dublin) and private cover in public hospitals.

In August the VHI blamed its ageing membership and high cost of new technology for its increasing premium rates.

A spokeswoman for the Department of Health said BUPA's Cash Plans did not fall within the system of private healthcare under the Health Insurance Regulations 1996. However, the spokeswoman said, health insurers had to operate under the regulations on "community rating" which in theory prevents older people from being penalised with higher health insurance charges.

The VHI statement pointed out a threefold difference in one particular premium charged by BUPA. A Protection 3 Cash Plan was offered to an 18-year-old for £100 per year, and to a person in the 55-to-64 age group for £405 per year.

Mr O'Rourke said the cash plans were rated in a commercially sound way. "Very specifically in the legislation, cash plans are excluded from community rating. The increased rates are a discretionary convenience."

He said that BUPA was merely responding to the market in an innovative way. However, he said the Government had not agreed to allow tax relief on Cash Plans as well as basic health insurance payments.

He said the company expected to expand the market and attract younger people, although he would not give figures on BUPA's targets for market share. Thirty- nine per cent of the population has VHI cover.

Mr O'Rourke said the basic Essential Scheme was 7 per cent cheaper than the equivalent VHl scheme. VHI disputes that the schemes are comparable. The Essential Scheme with protection 1 was 19 per cent cheaper for those under 18, Mr O'Rourke said, 12 per cent cheaper for those in the 19-to-49 age group and 5, per cent more expensive for those aged over 50.