BUPA Ireland has confirmed that it is discussing its insurance products with the Department of Health in the light of the Health Insurance Act 1994.
The Act provides for "community rating", according to which all subscribers pay the same premium for the same cover irrespective of age.
The Department of Health, in a statement last night, said the effect of the BUPA package might contravene the legislation. It had met BUPA yesterday and had begun intensive discussions with it on its schemes.
The Department said it hoped the discussions would lead to a resolution of the issues and that legal action could be avoided
A spokeswoman for BUPA said the company was confident that its products complied fully with the legislation. "We considered the legislation before we introduced our products," she said.
Asked if BUPA products were weighted according to age in other countries, she said she did not know what BUPA did in other countries.
The board of the VHI called on the Minister for Health to take immediate steps to protect community rating.
"The introduction of risk-rated insurance products which are designed to penalise people on grounds of age will result in thousands of people over the age of 50 being unable to afford private health insurance in this country within a matter of years," said Mr Noel Hanlon, the VHI chairman.
He said the cash plans which BUPA proposed to launch on January 1st flouted the Health Insurance Act.
However, the BUPA spokeswoman denied this. "BUPA has only one health insurance product, its essential plan, for which everyone pays the same irrespective of age," she said. "This gets People everything they would require, including heart by-pass operations.
"The cash plans give people extra choice in terms of comfort or convenience, like private rooms or a different hospital, or the cash can be used to pay a child-minder while a mother is in hospital, for instance. Cash plans have nothing to do with treatment. People are covered on the essential plan for treatment."
She acknowledged that the cash-plan premiums were age-related, but pointed out that this has always been made clear
The Independent Hospitals Association of Ireland pointed out in a statement that the VHI had no agreements with its members for 1997, and its 19-member private hospitals would be applying previously-announced increases in charges from February 1st. The IHAI had made agreements with BUPA, it added.
In a separate development, the human rights organisation AFrI claimed yesterday that BUPA in the UK had major investments in the arms trade.
"BUPA owns nearly 1 1/2 million shares in six major defence firms including British Aerospace and GEC, companies which have plied weapons to countries like Indonesia and Nigeria," it said in a statement.
The BUPA spokeswoman told The Irish Times that BUPA Ireland was not at the stage where it had generated a surplus to invest, but Irish subscribers would benefit from the investments of BUPA International. "It would invest in different companies. Some of those might include companies like British Aerospace. Investment decisions would be taken on the basis of generating a return."
A VHI spokesman said the majority of its reserves were invested in government gilts.