BUPA's Withdrawal
15/12/06 00:31 Filed in: Politics
BUPA's
decision to pull out of the Irish market leaves the
PDs, and Mary Harney in particular, with a lot of egg
on their faces.
For a long time, the PDs have sold themselves as the champions of the free market, competition and deregulation. That a PD minister (and former leader of the party) could preside over the implementation of such an anti-competititve monstrosity as risk equalisation is a bad joke. That she should just shrug her shoulders when the main competitor to the VHI folds its tent and leaves, shreds her credibility completely.
So now we're back to a virtual VHI monopoly in the health insurance market. The third player in the market, Vivas, will probably pick up some of BUPA's ex-customers, but the likliheood is that most of them will go to the VHI. Like when Eircom pulled the plug on Smart Telecom, many of those who were left high and dry went back to the former state monopoly, just in case they got caught again. So it will be with those seeking a replacement for their BUPA cover.
This was badly handled from start to finish. Once the government accepted that the PHI market had to be opened up to competition, it should have prepared the VHI for privatisation. But what about all those elderly and infirm subscribers? Well, what the government could have done was to do an audit of the VHI on the day before BUPA opened its doors in Fermoy, and identified all those subscribers that would be seen as a burden on a privatised VHI. These could then have been put into a new, government-backed scheme, while the rest of the VHI could have been sent to market to seek its fortune as a private company, on an equal footing with its competitiors. If risk equalisation subsequently had to come in, then it could have been applied more fairly.
BUPA's decision to quit does not surprise me. I know someone who was doing some consultancy work for them when all of this was going on, and he told me that he had seen the books, and that BUPA simply could not afford to stay in a post-risk equalisation market. They weren't bluffing.
I reckon Mary Harney is a lousy poker player.
For a long time, the PDs have sold themselves as the champions of the free market, competition and deregulation. That a PD minister (and former leader of the party) could preside over the implementation of such an anti-competititve monstrosity as risk equalisation is a bad joke. That she should just shrug her shoulders when the main competitor to the VHI folds its tent and leaves, shreds her credibility completely.
So now we're back to a virtual VHI monopoly in the health insurance market. The third player in the market, Vivas, will probably pick up some of BUPA's ex-customers, but the likliheood is that most of them will go to the VHI. Like when Eircom pulled the plug on Smart Telecom, many of those who were left high and dry went back to the former state monopoly, just in case they got caught again. So it will be with those seeking a replacement for their BUPA cover.
This was badly handled from start to finish. Once the government accepted that the PHI market had to be opened up to competition, it should have prepared the VHI for privatisation. But what about all those elderly and infirm subscribers? Well, what the government could have done was to do an audit of the VHI on the day before BUPA opened its doors in Fermoy, and identified all those subscribers that would be seen as a burden on a privatised VHI. These could then have been put into a new, government-backed scheme, while the rest of the VHI could have been sent to market to seek its fortune as a private company, on an equal footing with its competitiors. If risk equalisation subsequently had to come in, then it could have been applied more fairly.
BUPA's decision to quit does not surprise me. I know someone who was doing some consultancy work for them when all of this was going on, and he told me that he had seen the books, and that BUPA simply could not afford to stay in a post-risk equalisation market. They weren't bluffing.
I reckon Mary Harney is a lousy poker player.