Madam, - Quinn and Hibernian Health insurance companies have welcomed the Supreme Court's decision on Bupa's challenge to risk equalisation. I assume, therefore, they do not support the concept of risk equalisation payments.
It is good for consumers of private health insurance to have competition in the market, but the mechanism of achieving price competition is important for a fair and equitable market to evolve. Indeed, there are various regulations in place within the market that attempt to prevent companies making profits based on an individual's health risk. Risk equalisation is just one of those, but the current law in this regard has now been found inadequate.
Prof Alain Enthoven of Stanford University, California, one of the world's most respected health economists and a supporter of competition in health care, indicated in his 1993 paper on managed competition that risk equalisation was one of the key regulations of competition in a health system financed through health insurance.
In January 2006, Holland was the first country in the world to introduce a managed competition system. Dutch law dictates that health insurance companies have a duty to ensure the delivery of efficient, quality healthcare to their members and are not just insuring against healthcare costs.
Individual and group purchasers of insurance are expected to move to companies that achieve such goals. Indeed, the Dutch government is planning a market where it will in fact be beneficial for insurance companies to seek older customers with chronic conditions. This is being achieved through a scheme whereby a proportion of each individual's insurance premium is deposited in a central fund that then allocates risk-adjusted payments to insurance companies, compensating them for high-risk individuals.
A company with lower-risk individuals does not directly compensate a competitor with higher risk membership as the scheme here proposed. The Dutch system is much fairer system for competing companies.
In Ireland, because selection of lower-risk individuals is prohibited, the companies advertise health and other products that attract younger consumers, a form of risk selection known as market segmentation. This has assisted Quinn and Hibernian to have a younger membership than VHI. All proponents of managed competition strongly oppose such activities and in Holland this is achieved through regulations including risk equalisation.
Let's at least consider going Dutch! - Yours, etc,
Dr JOHN BARTON,
Beechlawn,
Ballinasloe,
Co Galway.