'Risk Equalisation' set aside by Supreme Court
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ubiquitous
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Socialised health care systems are doomed to failure, unless you are dealing with a country like Cuba where doctors and nurses are happy to work for peanuts. We have a socialised public health care system in this country and it is a disaster. That is why people choose to pay VHI/Quinn/VIVAS for services they can (theoretically) get for free.
I don't think the Supreme Court had any problem with that. Their reading was that it was legally wrong under the legisation to apply community rating to the whole population of insured people rather than to individual plans.
Hear, hear. Alas our health system is such a shambles, and the only person with the cajones to take it on has turned out not to have had much success.
Duke of Marmalade
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This country wants community rating. Under a state monopoly no problems. Under a competitive system required by EU it needs risk equalisation to be stable.
As Sunny says the Supreme Court have simply played clever cloggs. Nothing wrong with RE, but their reading of the Law was that RE applies to plans rather than people, gee why did us ordinary folk and legislators and High Court judges not spot that one?
This is absurd nonsense. The Government should simply change the law or better still ask the SC to write the correct words.
If community rating is abandoned it will represent the greatest confiscation of assets since Henry VIII went looking for a few monasteries as holiday homes. A whole generation has paid into the VHI on a CR basis - this effectively means spreading the costs levelly (ignoring medical inflation) throughout your life. This implicitly means paying "too much" when you are young and so building up reserves to be drawn down when you are older. To scrap CR now would be to steal all those reserves from a whole generation.
This system of CR backed by RE works in other jurisdictions, it is not per se unworkable. Either the Government has been careless with the wording of the Act or the SC are simply trying to show how clever and important they are. A system which is so focussed on interpretation of the wording of Acts rather than what was obviously the intention is to me a pomposity. Scrap the Supreme Court.
As Sunny says the Supreme Court have simply played clever cloggs. Nothing wrong with RE, but their reading of the Law was that RE applies to plans rather than people, gee why did us ordinary folk and legislators and High Court judges not spot that one?
This is absurd nonsense. The Government should simply change the law or better still ask the SC to write the correct words.If community rating is abandoned it will represent the greatest confiscation of assets since Henry VIII went looking for a few monasteries as holiday homes. A whole generation has paid into the VHI on a CR basis - this effectively means spreading the costs levelly (ignoring medical inflation) throughout your life. This implicitly means paying "too much" when you are young and so building up reserves to be drawn down when you are older. To scrap CR now would be to steal all those reserves from a whole generation.
This system of CR backed by RE works in other jurisdictions, it is not per se unworkable. Either the Government has been careless with the wording of the Act or the SC are simply trying to show how clever and important they are. A system which is so focussed on interpretation of the wording of Acts rather than what was obviously the intention is to me a pomposity. Scrap the Supreme Court.
Well, NHS docs don't work for peanuts!
Figures of £100,000 per annum have been bandied about for high earning GPs there! (and regular earners in 70,000-80,000 level)
Cuban health care system excellent, I wish we could transplant it here..
Duke of Marmalade
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It is very important to note that the SC did not rule RE unconstitutional. It ruled that the law passed by the Dail did not entitle them to do what they wanted to do. It is purely a legal interpretation of words, not a fundamental point of principle.
Personally I think the SC is simply flexing its muscles letting those High Courts know who best interprets the Law. Its a load of old nonsense for which the taxpayers pay.
The Dail should pass it over to the SC and ask "please write what we meant", but then that would mean hard work for the SC so no danger of them taking up that challenge.
Harney is a disaster. She is now implying that RE is illegal and so CR must fall. Not at all, simply they didn't write the rules properly.
Personally I think the SC is simply flexing its muscles letting those High Courts know who best interprets the Law. Its a load of old nonsense for which the taxpayers pay.
The Dail should pass it over to the SC and ask "please write what we meant", but then that would mean hard work for the SC so no danger of them taking up that challenge.
Harney is a disaster. She is now implying that RE is illegal and so CR must fall. Not at all, simply they didn't write the rules properly.
How do you know?
Says a lot that the only form of insurance where it pays to be younger is community rated.
Complainer
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It doesnt seen to be a disaster in the Uk where just 10% feel the need for health insurance.
Duke of Marmalade
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That's what the Dail voted for. But maybe you're right, subject to a referendum Dana would probably get a "No to CR".
Duke of Marmalade
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VHI has operated as a combination of an insurance policy and a savings policy. People have paid too much when they were young so that they were "saving" for when they get old. If community rating is abolished, the very least that society owes to those who have made such savings is that their future contributions will be reduced to recognise these savings.
This won't happen. We are a CR society. The government have to tighten up the law to enable RE, get the SC to write the rules if necessary. And BUPA should be made to pay for their opportunistic attack on our system.
CR is essential for the government to continue to pass of the extra taxation that is private health insurance as some sort of benefit so we all pay for it. Without CR more people would go public, and that would be a disaster for government, as well as being unpopular. They'd have to increase the 'health levy', another load of nonsense from the 'servants' of this country. Call it what it is, a tax.
We should ask ourselves this: If we all refused to pay private health insurance, what would our government do?
We should ask ourselves this: If we all refused to pay private health insurance, what would our government do?
Surely the real scandal here is with the elderly having to rely on private health insurance to get good quality health-care. The Govt is hiving off its responsibility to look after the most vulnerable onto private insurers and yet accusing the private insurers of wanting to cherry-pick its customers.
Why does VHI have so many older customers ? No surprise, given that for years they were the only insurer in a non-existent market.
Why does VHI have so many older customers ? No surprise, given that for years they were the only insurer in a non-existent market.
Duke of Marmalade
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Wrong question. VHI probably has or had a fair cross section of the population.
The question is "why did BUPA not have many old customers?" After all they were community rated and they were cheaper. The answer is clear; BUPA targetted the young, despite claiming to be open to all. It was exactly this cynicism that RE was meant to tackle. Somehow our legislators messed up the wording. It is absolutely galling that BUPA might get away with their cynical gamble that the legislation, which they were fully aware of, wouldn't stick.
I suspect many older people just did not bother to switch to Bupa. Customer inertia and loyalty is a well known factor, not just in health - many people don't bother to switch bank accounts even though better value may be had elsewhere.
How did Bupa 'target younger people' ? They advertised their products publically - everyone was equally aware of what they offered and their costs. Why did older people not switch ?
VHI would have built up a large customer base (100% at one stage) over the years so its only natural that their age profile would be older than newcomers.
How did Bupa 'target younger people' ? They advertised their products publically - everyone was equally aware of what they offered and their costs. Why did older people not switch ?
VHI would have built up a large customer base (100% at one stage) over the years so its only natural that their age profile would be older than newcomers.
I don't think it fair to lay the blame for the age profile of members at the door of other insurers, only.
VHI have been loosing its younger customers for years and as far as I can see they have done nothing to invite them back. Can anyone here recall being actively marketed by VHI after switching from them?
It's probably easier to sit on your hands and do nothing as opposed to developing into the efficient and innovative company that flourishes in a non monopolistic market.
They have no defence for their higher premiums, when questioned, except for to say that their age profile is higher than their competitors, which means higher pay outs.
If they seriously wanted to offload the higher risks to other insurers they would not make it so difficult for them to leave, by creating a doubt in the minds of the gullible that they would in some way be getting an inferior product. They want all the customers, but on their terms.
The relative efficiency, in terms of cost base, of the different insurers is anyone’s guess but I would bet that the new kids on the block are a dab hand better at it than VHI.
VHI have been loosing its younger customers for years and as far as I can see they have done nothing to invite them back. Can anyone here recall being actively marketed by VHI after switching from them?
It's probably easier to sit on your hands and do nothing as opposed to developing into the efficient and innovative company that flourishes in a non monopolistic market.
They have no defence for their higher premiums, when questioned, except for to say that their age profile is higher than their competitors, which means higher pay outs.
If they seriously wanted to offload the higher risks to other insurers they would not make it so difficult for them to leave, by creating a doubt in the minds of the gullible that they would in some way be getting an inferior product. They want all the customers, but on their terms.
The relative efficiency, in terms of cost base, of the different insurers is anyone’s guess but I would bet that the new kids on the block are a dab hand better at it than VHI.
Duke of Marmalade
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Okay we all agree that competition is better than monoploy. But with CR the easiest way to compete is to target the obviously healthier sections of the community, in fact money for old rope and didn't BUPA spot a good thing. Competition which favours the best cherry pickers adds nothing to society. Competition which encourages efficient administration is a good thing. But without RE the cherry-picking type of competition would dominate the efficiency type. VHI were due very large sums from BUPA and that had nothing to do with BUPA being more efficient, it was purely cherry picking.
Interesting question whether motor insurance should be community rated as in New Zealand. The difference is that there is a certain fault which attaches to high risk motorists and risk rating helps control behaviour. However, I wouldn't dismiss CR for motor insurance out of hand especially when many "innocent" young male drivers are clearly being outrageously charged for the "sins" of a few.
Interesting question whether motor insurance should be community rated as in New Zealand. The difference is that there is a certain fault which attaches to high risk motorists and risk rating helps control behaviour. However, I wouldn't dismiss CR for motor insurance out of hand especially when many "innocent" young male drivers are clearly being outrageously charged for the "sins" of a few.
Duke of Marmalade
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I don't think you fully understand RE. What happens is that the market is taken as a whole and the chances of being in hospital and the average duration of stay is calculated for the whole population.
Then each companiy's results are restated as if the chances of being in hospital and the duration of stay were the same as the market average. The argument is that there is nothing a company can do to actually affect these chances, it is a matter of luck or more likely having deliberately targetted the more healthy lives. Make no mistake BUPA does not make you healthy but strangely people with BUPA are healthier than those with VHI
If BUPA had "averagely" healthy lives it would have made much less profit and so under RE it needs to give that unearned and undeserved "profit" over to VHI.
All other aspects of the company's performance such as admin efficiency are not equalised, but these are really small beer compared to the huge difference in risks between young and old.
Then each companiy's results are restated as if the chances of being in hospital and the duration of stay were the same as the market average. The argument is that there is nothing a company can do to actually affect these chances, it is a matter of luck or more likely having deliberately targetted the more healthy lives. Make no mistake BUPA does not make you healthy but strangely people with BUPA are healthier than those with VHI
If BUPA had "averagely" healthy lives it would have made much less profit and so under RE it needs to give that unearned and undeserved "profit" over to VHI.
All other aspects of the company's performance such as admin efficiency are not equalised, but these are really small beer compared to the huge difference in risks between young and old.
Oh I understand RE alright. Its an idealised mechanism which only works on a level playing field.
Imagine a market with no health insurers. Then three insurers arrive. Their market shares should be distributed roughly equally and with the same healthyness distribution that you mention. If any of them were cheaper/more efficient, they might pick up a higher proportion of customers.
In reality we started with one insurer who already had 100% of the market.
Then, newcomers arrive - what happens to the existing insurer ? Do customers leave in equal proportion across all ages to the newcomers ?
I doubt it.
Older, less healthier, customers who may have been with them for decades tend to stay, whereas younger ones move.
In addition, first-time customers look at the health providers products and decide VHI is too expensive and they join Bupa/Vivas.
It'd be interesting to look at the distribution of first timers in each health-insurer, and ask why they do not join VHI.
The upshot of all this is that the market is skewed because for years there was only one insurer. Effectively,the 'unhealthier' portion stay with VHI.
Over time, this effect should lessen and the other insurers should eventually have a similar distribution to VHI. But only IF VHI make themselves more competitive and stop using RE as an excuse not to become more efficient.
There are lots of factors affecting the type of market share that an insurer has.
Lumping them all under 'cherry-picking' does not help to understand those factors.
Imagine a market with no health insurers. Then three insurers arrive. Their market shares should be distributed roughly equally and with the same healthyness distribution that you mention. If any of them were cheaper/more efficient, they might pick up a higher proportion of customers.
In reality we started with one insurer who already had 100% of the market.
Then, newcomers arrive - what happens to the existing insurer ? Do customers leave in equal proportion across all ages to the newcomers ?
I doubt it.
Older, less healthier, customers who may have been with them for decades tend to stay, whereas younger ones move.
In addition, first-time customers look at the health providers products and decide VHI is too expensive and they join Bupa/Vivas.
It'd be interesting to look at the distribution of first timers in each health-insurer, and ask why they do not join VHI.
The upshot of all this is that the market is skewed because for years there was only one insurer. Effectively,the 'unhealthier' portion stay with VHI.
Over time, this effect should lessen and the other insurers should eventually have a similar distribution to VHI. But only IF VHI make themselves more competitive and stop using RE as an excuse not to become more efficient.
There are lots of factors affecting the type of market share that an insurer has.
Lumping them all under 'cherry-picking' does not help to understand those factors.