Harney says Bupa ruling must be studied 'in depth'

The Minister for Health Mary Harney said this afternoon that she was unable to make any immediate decision on how to proceed with risk-equalisation following this morning’s Supreme Court ruling which struck down the controversial scheme.

Bupa today won its appeal against the High Court's rejection of its challenge to risk equalisation.

In a unanimous ruling the Supreme Court found that the Ms Harney had acted outside her power when requiring new companies in the private health insurance market to make risk-equalisation payments to the State-backed VHI to compensate it for its older and less profitable customer base.

In the wake of the ruling, Ms Harney said time was needed "to study in depth" the judgment and to assess the "complex financial, legal and policy matters involved".

She reiterated her belief that risk equalisation was "the financial mechanism to support community rating" and said a "substantial body of primary legislation and regulations" introduced to support community rating had been promoted by successive governments. "It is fair to say there has been a consensus for community rating and for the necessary mechanisms to support it, such as risk equalisation."

Fine Gael's health spokesman Dr James Reilly said the ruling reflected “yet another serious blunder” on the part of the minister. "[It] is reflective of an extremely serious blunder by Mary Harney and her Department in the interpretation of their own legislation," he said.

"The private health insurance market depends on striking a balance between the issues of community rating, risk equalisation and competition. It is clear that the health minister massively bungled this balance."

Labour's health spokeswoman Jan O'Sullivan warned that the decision could have "very serious consequences" for health policy in this country and "could lead to a significant increase in premium payments for VHI members".

She said risk equalisation "underpins community rating so that older people who are more likely to need healthcare do not have to pay much higher rates than younger, healthier people".

She called on Ms Harney to "spell out immediately how the Government intends to respond to this decision. If there was a problem with the legislation under which the scheme was established then this must be rectified immediately."

VHI Healthcare said it was "very disappointed" with today's decision. The insurer's chief executive Jimmy Tolan described community rating as "central to the Irish health insurance system" and said risk equalisation was "necessary to ensure community rating is implemented."

He warned that the Supreme Court decision could have "serious consequences for older and chronically ill members of society" and said it was the goal of the VHI "to try and ensure that private health insurance can continue to be purchased on acceptable terms by our more medically vulnerable customers."

The VHI's rivals in the health insurance market welcomed the Supreme Court ruling.

Quinn Healthcare said it had always had "fundamental concerns" about risk-equalisation. In a statement that company said it fully supported "a fair and competitive community rated market where access to private health insurance is fully available to all members of society. The Risk Equalisation Scheme previously introduced was clearly neither a fair nor appropriate means of achieving such a market."

Hibernian Health's managing director Dick O'Driscoll said the ruling was "great news for the health insurance market and consumers".

Mr O'Driscoll said that with the "striking down today by the Supreme Court of the risk equalisation scheme there is a clear need to now review the other single largest hindrance to competition in the market which is the dominance and regulation of the Vhi".

The Health Insurance Authority said it noted the court's decision and said it would study it carefully before making further comment.

Age Action said it was concerned at the "possible implications" of the ruling on older people. "It could lead to a situation where the cost of private health insurance is prohibitive, at a time when public health services for older people are inadequate," Age Action spokesman Eamon Timmins said.

Earlier this year, the European Court of First Instance dismissed Bupa's appeal against a European Commission decision to approve the scheme on the basis that the Government was entitled to compel Bupa to make compensatory payments to the VHI.

The stay on the introduction of risk equalisation was obtained in July 2007 by the Quinn Group, which took over Bupa earlier that year.

The Quinn Group has argued in separate proceedings yet to be determined that it is not obliged to make risk-equalisation payments for three years. It claims it would incur costs of €30 million if obliged to make payments.