# BUPA leaving Ireland



## thejuggler

Just heard this from a friend who works there - Bupa are leaving Ireland and all its staff are to be let go.


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## thejuggler

*Re: Are BUPA likely to pull out of Ireland ?*

Bupa have just announced to their staff in Fermoy that they are pulling out of Ireland.  All jobs are being lost


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## ClubMan

*Re: Bupa leaving Ireland All Fermoy jobs lost*

[FONT=Arial, Verdana, Helvetica]RTÉ News - BUPA to withdraw from Irish market[/FONT]


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## PGD1

*Re: Bupa leaving Ireland All Fermoy jobs lost*

is this just posturing?


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## ClubMan

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Unless the company's management are lying I presume not.


> BUPA Ireland forced to close it's business
> 
> "_We have no choice but to leave the market with great regret_"
> Martin O'Rourke


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## Brendan Burgess

*Re: Bupa leaving Ireland All Fermoy jobs lost*

I doubt if it's just posturing. It's very difficult to make money in a market which is artificially constructed. They have run the numbers and it's unlikely that they will be profitable, so they will exit the market.

It's time that the government got rid of community rating and risk equalisation.

Brendan


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## Omega

*Re: Bupa leaving Ireland All Fermoy jobs lost*

.....so, we're all back to the tender mercies of the VHI.....


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## ClubMan

*Re: Bupa leaving Ireland All Fermoy jobs lost*

And _VIVAS_?


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## nicelives

*Re: Bupa leaving Ireland All Fermoy jobs lost*

an absolute disgrace, Bupa have been a life saviour financially last year, VHI better not have a problem being a net contributor to my medical bills seeing as they pushed for the reinstatement of their near monopoly.


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## ajapale

*Re: Bupa leaving Ireland All Fermoy jobs lost*

..and ESB Providend...


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## scuby

*Re: Are BUPA likely to pull out of Ireland ?*

so Bupa have decided to do a runner !! was it all about the money ? and not putting up a fight ? or an election stunt coming up to xmas....


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## redstar

*Re: Are BUPA likely to pull out of Ireland ?*

So not a bluff then.   Nice of them to inform the media before their customers


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## ShaneMc

*Re: Are BUPA likely to pull out of Ireland ?*

Does anyone know what effect this will have on customers who now have to switch back to VHI. I read on RTE that they can switch with no break in cover, but if they contracted an illness whilst at BUPA will they have to pay a higher premium?


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## ajapale

*Re: Are BUPA likely to pull out of Ireland ?*

ON the rté interview there was an assurance that people insured by BUPA who have existing illnesses can transfer to other providers with no penalty.


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## half scot

*Re: Are BUPA likely to pull out of Ireland ?*

So much for a bluff eh....

The government was very quick to stand up for Aer Lingus when it was the subject of an 'anti-competitive' approach by Ryanair but have kept their mouths shut over this absolute disgrace...wonder why??Must be because so many are gona lose their jobs...

Cheers Bertie,as always


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## muzaway

*Re: Bupa leaving Ireland All Fermoy jobs lost*

How Ironic,

VHI have a banner ad on their website today that says "Tis the season to be trampled"

They must know all us poor Bupa clients will now be forced to some looking to them for insurance.


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## greenfield

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Just looking at Vivas website and the price is certainly compatible with Bupa, however my concern would be whether many consultants are willing to accept Vivas payment - anyone know?


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## Cyrstal

*Re: Bupa leaving Ireland All Fermoy jobs lost*

This is absolutely ridiculous - that VHI will be back monopolising the Private Health Insurance in Ireland.  I'm not too sure too many people would go with VIVAS??  As a Bupa member though I will be investigating VIVAS policies before going back to VHI again....I saw that Mary Harney 'regrets' Bupas decision....Jeez - I'm raging.


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## elefantfresh

*Re: Bupa leaving Ireland All Fermoy jobs lost*

For Gods sake, whats wrong with this Government?


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## Dinky

*Re: Bupa leaving Ireland All Fermoy jobs lost*



greenfield said:


> Just looking at Vivas website and the price is certainly compatible with Bupa, however my concern would be whether many consultants are willing to accept Vivas payment - anyone know?


 
Vivas have 99% consultants participating, just like Bupa and VHI.


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## laoisfan

*Re: Bupa leaving Ireland All Fermoy jobs lost*

anybody who is renewing or has renewed their bupa subscription in jan'07 will have cover (according to their plan) for 2007. bupa will not be renewing subscriptions from feb'07 onwards.


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## whackin

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Why is it the Governments fault? It's  private business. 

Plus, Vivas health are quite a realistic alternative so talk of a monopoly is just typical reactionary nonsense by people who were too blinkered to be aware of their presence. One wonders how these people can properly feel aggrieved now considering they obviously were not fully aware of the range of products in the market to begin with.l


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## askalot

*Re: Bupa leaving Ireland All Fermoy jobs lost*



greenfield said:


> Just looking at Vivas website and the price is certainly compatible with Bupa, however my concern would be whether many consultants are willing to accept Vivas payment - anyone know?



Their coverage with consultants is as good as VHI. I recently had to make my first claim with them and they covered the cost of the blood works as well as the consultant's charge, which surprised the lab as neither VHI nor BUPA would have covered it.


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## Dinky

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Bupa's press statement [broken link removed].

Letter to their members [broken link removed].

Notice for members renewing in January [broken link removed].


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## microsquid

*Bupa leaving Ireland All Fermoy jobs lost*

... blaming risk equalisation.
Full story here: [broken link removed]

What will happen with Vivas? Do you reckon it's a bluff to get the government to do a U-turn?


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## greenfield

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Thanks for that, reassuring to know that Vivas customers are happy, had looked at Vivas before but was never tempted to change as was very happy with Bupa and the price difference was minimal, however will definitely now consider as alternative to VHI


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## Dinky

*Re: Bupa leaving Ireland All Fermoy jobs lost*



greenfield said:


> Thanks for that, reassuring to know that Vivas customers are happy, had looked at Vivas before but was never tempted to change as was very happy with Bupa and the price difference was minimal, however will definitely now consider as alternative to VHI


 
I only switched over earlier this year.  I was really happy with Bupa, but even a few extra quid in my pocket was worth the move.  Have had no problems with Vivas so far.


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## jprender

*Re: Bupa leaving Ireland All Fermoy jobs lost*

If we all change over to Vivas, wont we just all be in the same position a few years down the line again ?  

I cant see Vivas paying over lumps of money to the VHI either.   Who would believe that in order to get rid of a monopoly, the incoming supplier has to pay over wads of cash to compensate the original supplier that had it so good for donkeys years.   It is very hard to blame BUPA.   They were a breath of fresh air and provided really good options.

This Republic is crazy.   Anyway, I am going out to my garden to tend to my banana tree.

Disgusted I am, disgusted.


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## howstrange

*Re: Bupa leaving Ireland All Fermoy jobs lost*



Dinky said:


> I only switched over earlier this year.  I was really happy with Bupa, but even a few extra quid in my pocket was worth the move.  Have had no problems with Vivas so far.



I am with Vivas too for the last year. I have had no problems at all with them. I had to get an MRI scan earlier in the year and it was fully covered. Just had to fill out a form. Found their customer service v good too over the phone. BTW i have no affiliation with Vivas just mentioning my experiences with them and that they are a decent alternative to VHI.


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## ajapale

*Re: Bupa leaving Ireland All Fermoy jobs lost*

It might be a little late but perhaps a solution would be to forceably move a tranche of higher risk VHI customers to BUPA, VIVAS and (yes) ESB providend.

Inertia and a (misguided) sense of loyalty is all that is holding these customers anyway.

On the other hand I have to agree with Brendan - the whole private health insurance edifice in Ireland is an artificial construct built on a seriously flawed view of how (insurance) business operates.


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## jprender

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Has to be the final nail in the coffin for this government.


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## ClubMan

*Re: Bupa leaving Ireland All Fermoy jobs lost*

You mean like the previous nails which caused their popularity to soar in subsequent opinion polls?


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## jprender

*Re: Bupa leaving Ireland All Fermoy jobs lost*



elefantfresh said:


> For Gods sake, whats wrong with this Government?


 

How much time have you got ?

They have made an absolute pigs ear of this.
And silly me thinking that the health sector couldn't get any worse.


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## DrMoriarty

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Far be it from me to defend either the government or the VHI, but BUPA are no 'life saviours', either — just another hard-nosed insurance company chasing profit. More efficiently than others, I'll grant you.

Two points worth bearing in mind:

(a) In Australia, where they are among the dominant players, BUPA receive Risk Equalisation payments and are happy to do so.

(b) When they entered the Irish market, BUPA knew that Risk Equalisation was part of the 1994 legislation. Now that the numbers aren't working out, they claim to have been 'forced out of the market'?

Methinks Martin O'Rourke is shedding a few crocodile tears in those populist press releases/letters to members.


> Irish consumers are the real losers...


Insurance of any kind is predicated on the company's gain and the consumers' (aggregate) loss.


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## Seagull

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Will Vivas follow suit? They have also not been paying into the risk equalisation scheme. They are also going to face higher costs as a result of the ruling.


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## orka

*Re: Bupa leaving Ireland All Fermoy jobs lost*



jprender said:


> How much time have you got ?
> 
> They have made an absolute pigs ear of this.
> And silly me thinking that the health sector couldn't get any worse.


 
Moan, moan, moan. What could the government have done differently? Given into the blackmail demands of BUPA? If you have community rating, you have to have risk equalisation or it just won't work.



Brendan said:


> It's time that the government got rid of community rating and risk equalisation.
> 
> Brendan


 
Community rating makes private health insurance affordable for older people. Yes it would be nice if we had a good enough health service that no-one needed private health insurance but we don't and it would be particularly unfair to older people who have paid above-risk costs in their younger years (in the expectation of in turn being subsidised when they get older) to find themselves priced out just when they need the cover.
None of the moany 'isn't the government terrible' posts has offered anything constructive. What is the alternative to risk equalisation? Do you think community rating can trundle along without RE? Is rating by age feasible? What about people who have contributed to VHI for years in the expectation of subsidy when they get older? Is it fair that BUPA make big profits because they have a younger profile of customers?

I think that BUPA should absolutely be permitted to profit from any efficiencies they introduce into the system (e.g. shortening the average hospital stay from X to Y days etc.) but not from being 'lucky' enough to have a younger profile of customers. 

An 'age at entry' system would be a fairer to individuals. One unfairness that we currently have with community rating is that someone can join at age 64 (when they will be a net beneficiary) and pay the same price as someone who has been contributing since they were born. Age at entry woud mean having a price for those who joined at birth, a slightly higher price for those who join at 20 and a higher price for each joining age so that someone joining at age 64 would pay significantly more than a 64 year old who had been there from birth. You would still need risk equalisation between companies though....


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## ubiquitous

*Re: Bupa leaving Ireland All Fermoy jobs lost*

My own (admittedly limited) understanding of the health insurance market is that Ireland is the only country in the world that applies risk equalisation where there is a dominant player in the market with more than a 30% share of the market.  I also understand that community rating operates successfully in many countries without risk equalisation, although I stand to be corrected if necessary on both counts. 

It doesn't sound sensible that a market is closed to competition for decades, that the monopoly provider can use its monopoly power to expand its customer base over that time, and that as soon as a new entrant enters the market they have to pay the incumbent for effectively failing to attract a certain specified range of customers.

I think this particular mess could have serious political implications for the PDs and for FF. A lot of Bupa customers will be renewing their health insurance over the next 6 months and will resent having to forcibly switch to VHI or Vivas. Not to mention the 300+ jobs gone in Cork.


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## jprender

*Re: Bupa leaving Ireland All Fermoy jobs lost*



orka said:


> Moan, moan, moan. What could the government have done differently?


 
um, let me think.....

perhaps let the health insurers battle it out for business in an open market ?

If Bupa have been "lucky" enough to attract the more lucrative younger people, why havent VHI done something about it to get them back ?
You know... something really radical like reduce their charges.

Government/ Brewery / Piss-up / organise / couldn't 

are the words that spring to mind.


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## Meathman99

*Re: Bupa leaving Ireland All Fermoy jobs lost*

do BUPA or VIVAS prevent older people from joining up?  If not why do older people not avail of savings?


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## ClubMan

*Re: Bupa leaving Ireland All Fermoy jobs lost*



Meathman99 said:


> do BUPA or VIVAS prevent older people from joining up?


No - all insurers are subject to the same rules regarding new clients.


> If not why do older people not avail of savings?


Some do. Some don't - probably because of inertia.


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## Nermal

*Re: Bupa leaving Ireland All Fermoy jobs lost*



orka said:


> What about people who have contributed to VHI for years in the expectation of subsidy when they get older?


 
What about them? Why should they be protected? They are entitled to nothing. They may have hoped for the current situation to continue but never received any guarantee it would, nor could they have.

The whole point of insurance is that premium is proportional to risk. The more you restrict this mechanism, the less efficient the insurance market will be.


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## askalot

*Re: Bupa leaving Ireland All Fermoy jobs lost*



Nermal said:


> What about them? Why should they be protected? They are entitled to nothing. They may have hoped for the current situation to continue but never received any guarantee it would, nor could they have.
> 
> The whole point of insurance is that premium is proportional to risk. The more you restrict this mechanism, the less efficient the insurance market will be.



So I take it that you're not planning on getting old then!


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## orka

*Re: Bupa leaving Ireland All Fermoy jobs lost*



jprender said:


> perhaps let the health insurers battle it out for business in an open market ?


 
So get rid of community rating altogether? What about the policitical ramifications of pricing the over 50s out of a market they have subscribed to all through their healthy years?




jprender said:


> If Bupa have been "lucky" enough to attract the more lucrative younger people, why havent VHI done something about it to get them back ?
> You know... something really radical like reduce their charges.


 
With community rating, all subscribers have to pay the same so if they did reduce their charges, they would reduce for everyone - young and old alike.

Taking a simple example where there are only 30 year olds and 60 year olds in the market - 500 of each. The 30 year olds cost €100 pa in claims and the 60 year olds cost €1000 pa in claims - so the overall cost of claims is 500 * €100 (for the 30s) plus 500 * €1000 (for the 60s) = €550,000. So the annual premium is €550 each in a community rated system - rather than €100 for the 30s and €1000 for the 60s as would happen in an open market. 

Then a new company (BUPA) comes into the market and insures 250 of the 30 year olds at a very attractive premium of €400 - the cost of claims for these people is still €100 so they make a profit of €300 per person - shareholders back home will be v v happy.

Poor existing company (VHI) is left with the remaining 250 30s and still 500 60s so their cost of claims is now 250 * €100 + 500 * €1000 = €525,000 - or €700 per person spread over their remaining 750 policyholders. 

What should they do? 

1. Drop their price to €400 to win the young people back (jprender's suggestion)? But with community rating, they have to charge the same to everyone so their income would drop to 750 * €400 = €300,000 to cover claims of €525,000. Doesn't sound like much of a plan.

2. Charge the economic €700 and hope for the best? But the remaining young folk that they have will leave in droves, attracted by the €400 price from their competitor, spiralling the economics further out of control. Sure, some of the 60s will leave too but most have been with VHI for years and feel they will be better looked after by the company they have been loyal to.

3. Press the govt to introduce risk equalisation? Good in theory but politically will provoke moaning from the general populace who really don't understand what it's all about anyway but fall for throwaway phrase which sound good like 'ripoff' and 'anticompetitive'.

4. Press for an open market? Great in theory for the incumbent - they have a much lower expense base than their competitor and charging market rates would let them balance their premiums with their outgoings. BUT there would be an overall loss of policyholders and premium from the market as premiums would become unaffordable for older ages - plus there would be a huge backlash from these older people who had contributed for years and so essentially will end up paying for 2 generations of policyholders - the oldies they subsidised when they were young and themselves now they are old.

So, what to do???? But sure, you can't beat a good old moan can you? Reminds me of Fr Ted 'down with this sort of thing' - not sure what this thing is but we don't like it.

Sorry for the long post.


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## daltonr

*Re: Bupa leaving Ireland All Fermoy jobs lost*

I'm surprised anyone is surprised. I get the impression that
everyone including the Government thought this was some sort of bluff.
Before the court case Bupa were pretty unequivocal. They didn't seem to be trotting out the kind of vague statements that would allow them wiggle room.

Whatever people may think Bupa's motivation is, the bottom line is they are a business who had 22% of the market. They wouldn't be pulling out if the Irish market was a viable one for them. Businesses don't simply shut down because they want to make some political point.

So the real question is, just how badly screwed up does a market have to be if someone with 20% of the market can't make enough of a profit to remain in business, and someone with 78% needs to be subsidised.

If Vivas takes up most of the slack they presumably have to get hit with the same charge. They'd be fools to pay it, there is no way the government would be able to justify forcing another carrier out of the market.

-Rd


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## Nermal

*Re: Bupa leaving Ireland All Fermoy jobs lost*



orka said:


> But sure, you can't beat a good old moan can you? Reminds me of Fr Ted 'down with this sort of thing' - not sure what this thing is but we don't like it.


 
You're underestimating people's intelligence here, it's not beyond them to understand community rating. They just don't see why the health insurance market should be unlike any other.

As for moaning, what else can you call your bleating about the older people who have paid VHI? They did not have to pay it. They did so in the full knowledge of how community rating works and without any guarantee that it would continue.

If you cannot pay the true cost of private health insurance it should not be subsidised for you. Perhaps it might have a beneficial side-effect of greater demand for efficiency from the public health service we all *have* to pay for.


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## askalot

*Re: Bupa leaving Ireland All Fermoy jobs lost*



Nermal said:


> They did so in the full knowledge of how community rating works and without any guarantee that it would continue.
> 
> If you cannot pay the true cost of private health insurance it should not be subsidised for you. Perhaps it might have a beneficial side-effect of greater demand for efficiency from the public health service we all *have* to pay for.



The government did say it would continue. Though I suppose that should never be taken as a guarantee of anything.

Health care is always subsidised, either through community rating or if the older members of society are forced out of the private health insurance market and into the public system then it will have to be subsidised through higher taxes. Very few of us, young or old, could afford to pay the full cost of health care. In fact the full cost of private beds in public hospitals is subsidised by the tax payer, even those tax payers that can't afford private health insurance. Those with private health insurance are further subsidised by all tax payers through tax relief on their premiums.


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## nicelives

*Re: Bupa leaving Ireland All Fermoy jobs lost*

What was the Vhi doing with all the premiums it was getting when they were virtually the sole company in the Irish market for decades up to 1994? Vhi was never cheap and the Irish population and its members were on average much younger in the past. Is it not an obligation for an insurance health insurance company to invest to so as the offset its future responsibility?

I believe the Vhi has been wasting money for decades, doing very well for itself during the recession years. They still seem to have an incredible amount of wastage, the Joe Duffy switchboard lights up whenever the subject of paying double to consultants by Vhi or paying thousands for a transfer from one hospital to another. Their offics are in a multi-million euro location in the centre of Dublin city.

From my own experience as a customer of BUPA has been that they are much more more diligent on what they pay out for, their headquarters are in Fermoy which obviously has a much lower cost base than locating wher Vhi choose to. 

There are many things that the Vhi can do to control its own costs, it's too late to change its wrecklessness in the past for not wisely investing for their future, but demanding that the smaller player pay for all its losses and inefficiencies is incredible.

The way Mary Harney understands Risk Equalisation is bizarre, in the Austarlian case that she's so keen to quote, none of the other players are forced into the red to fund the marginally dominant player. It's not a similar case at all.

The law needs to stop the abuse of Community Rating, I know of one religious order who signs its members up at 65 when they need it, having never paid into it before that age. This is an abuse of the socialist nature of the idea. If people take out insurance at that age for the first time, they should not benefit from the same premium that someone who joined in their 20s would yet there's no talk of examining this.

If the government want Vhi to remain uncompetitive, inefficient and unrealistic, maybe it's better that they're given a monopoly ala protectionist Ireland.


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## darag

*Re: Bupa leaving Ireland All Fermoy jobs lost*



> Very few of us, young or old, could afford to pay the full cost of health care.


I don't believe it for a second.  That would mean the entire country is bankrupt or soon will be.  The vast majority is well able to pay the cost of health care because they simply don't get ill or very rarely get ill.  This is especially the case if they are young, they keep fit, don't smoke or drink to excess, eat healthily, etc.

VHI is effectively a kind of pyramid scheme.  After BUPA started,  they began to run out of suckers to come in at the bottom, so the government forces BUPA to pay to prop it up.  Just because you join a pyramid scheme doesn't mean you are entitled to hit the payoff.

Through the health system, the government already massively subsidises the cost of health care for everyone regardless of their condition, lifestyle or age.  Through community rating, the non-smoking, fit, youngish, healthy person is being forced to pay an additional subsidy.


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## imogen

*Re: Bupa leaving Ireland All Fermoy jobs lost*

I found VHI poor (admin, appallingly designed forms, telephone advice, availability of required treatment) and BUPA excellent but not much difference in price. Having BUPA certainly improved my treatment and possibly saved my life in 2004 when expensive drug treatment was an easy choice for my consultant because it was covered. 

My understanding from listening to the radio is that in other countries risk equalisation applies to patients over a certain age (65 in Australia) not to the whole population and this is a crucial difference.

There appears to be a development this morning that the govt may break up VHI (after most of us have been forced to move back to them, doutbless it will take about a decade to do and premiums will increase wildly) so perhaps Bupa's plan is to buy one of the breakup chunks after something has been done about the problems with risk equalisation?

I do find this an extremely depressing development. Some of you have probably been reading the "where should we emigrate to next" thread. I think a sharp eye needs to be kept on the net migration figures in the coming months and years and the nationality of those emigrating. For me after 15 years back in Ireland, the appalling planning decisions and the health service issues would be the things that would cause me to leave. 

What would make me stay is the remaining small Irish companies still offering excellent service like my broadband provider AHC networks, the generally good attitude of most public sector workers (I know this is controversial among many posters here), and my neighbours (well, most of them!)

Imogen


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## jprender

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Is it true that the VHI are considering using the e-voting machines to help admintrate all the new members that are on the way ? 

I heard that they will be delivered to VHI HQ on a super-truck through the port-tunnell.  

However, they will only be delivered after the super-truck driver takes in a Man Utd game and chats generally about the Irish economy to a group in a Manchester hotel.  

Afterwards, to set a good example, the driver will have a few pints and drive the wrong way up a motorway.

ahhhhh, that's bass !!!


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## askalot

*Re: Bupa leaving Ireland All Fermoy jobs lost*



darag said:


> Through the health system, the government already massively subsidises the cost of health care for everyone regardless of their condition, lifestyle or age.  Through community rating, the non-smoking, fit, youngish, healthy person is being forced to pay an additional subsidy.



And the ''non-smoking, fit, youngish, healthy person'' is subsidised by the smoking, unfit, oldish person through their taxes which help pay the tax relief on private health insurance premiums.


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## slave1

*Re: Bupa leaving Ireland All Fermoy jobs lost*

lest not forget the sad news to Bupa employees the week before Xmas....


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## ontour

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Someone correct me if I am wrong but Community rating is not the problem here.  If BUPA can sell their product more cheaply at a set rate to people of any age then that is good for the market.  They do not exclude older customers and the option has been there for a VHI customer of any age to transfer to BUPA.

The problem is Risk Equalisation based on the cost of running the service by other providers.  Basically the incentive to create a better more efficient service is not there as you will always be subsidising the inefficient poorly performing operators.

Basically you should not be legislating around the fact that a 60 yer old stays with VHI even though if they bothered they could get a cheaper premium and or a better service from another provider.

What about risk equalisation on mortgage interest rates for those people not bothered to change who they have their mortgage with, why should the pay higher interest ;-(


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## darag

*Re: Bupa leaving Ireland All Fermoy jobs lost*



> And the ''non-smoking, fit, youngish, healthy person'' is subsidised by the smoking, unfit, oldish person through their taxes which help pay the tax relief on private health insurance premiums.


Are you joking?  Otherwise it seems you're suggesting that the "smoking, unfit, oldish person" don't get this tax relief?  Or the ''non-smoking, fit, youngish, healthy person'' don't pay tax at all?


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## Violet Rose

*Re: Bupa leaving Ireland All Fermoy jobs lost*

what happens then when VIVAS get hit by RES....... where do you go then - VHI - think not!!!!!!


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## orka

*Re: Bupa leaving Ireland All Fermoy jobs lost*




Nermal said:


> The whole point of insurance is that premium is proportional to risk. The more you restrict this mechanism, the less efficient the insurance market will be.


And the more you expand this mechanism, the more refined the pricing and availability of insurance will become – so if you become long-term sick (or have a poor family history or are born disabled or look in any way like you might be an expensive proposition), no insurance company will give you a policy or if they do it will be at economic cost and so likely prohibitively expensive. A fully open market would push the sick and elderly back to public care leaving the insurance companies with the younger healthier people and making very fat profits. The health system as a whole would have significantly reduced income from private health insurance which means taxes would have to be raised to meet the extra costs.




Nermal said:


> You're underestimating people's intelligence here, it's not beyond them to understand community rating.


I agree that understanding community rating is not beyond most people here – how difficult is it to understand ‘everyone pays the same price. The end.’ ? I have my doubts that people understand risk equalization – what it’s for (and not for) and how it operates in practice.




Nermal said:


> As for moaning, what else can you call your bleating about the older people who have paid VHI?


There’s a difference between generalized ‘I don’t like this because I don’t like it’ moaning and making arguments for or against something. Whatever about the political backlash caused by BUPA’s withdrawal, it would be nothing compared with the issues if community rating were abolished and a totally free market permitted. 




Nermal said:


> If you cannot pay the true cost of private health insurance it should not be subsidised for you. Perhaps it might have a beneficial side-effect of greater demand for efficiency from the public health service we all *have* to pay for.


See my first point above. The old and the sick will be pushed back into the public health system with no accompanying premiums. Maybe in the long term you would see improvements in the health system but it would be disastrous in the short term. Just think how it would work in practice – my (young) premium might reduce to 25% of its current level, my parents premium might increase by 400% and someone with cancer’s premium would increase by several thousand percent. So I stay paying premiums; my parents might continue paying premiums at ‘young’ old ages but would probably stop when they reached 70/75; sick/disabled/expensive people stop paying premiums and fall back on the public system which is currently underfunded for the existing non-private health insurance people.




nicelives said:


> The way Mary Harney understands Risk Equalisation is bizarre, in the Austarlian case that she's so keen to quote, none of the other players are forced into the red to fund the marginally dominant player.


Are you sure BUPA would be forced into the red by this? They don’t publish results separately for Ireland which is surprising if it would make such a strong case for them. 




nicelives said:


> The law needs to stop the abuse of Community Rating, I know of one religious order who signs its members up at 65 when they need it, having never paid into it before that age. This is an abuse of the socialist nature of the idea. If people take out insurance at that age for the first time, they should not benefit from the same premium that someone who joined in their 20s would yet there's no talk of examining this.


I absolutely agree that something should be done to stop people joining at the last minute. The age at entry system I mentioned in a previous post would help enormously with this.




ontour said:


> The problem is Risk Equalisation based on the cost of running the service by other providers. Basically the incentive to create a better more efficient service is not there as you will always be subsidising the inefficient poorly performing operators.


No no no. RE is not based on the cost of running the system – it is based purely on expected/actual claims cost by age so that an insurer can benefit from efficiencies while still balancing out the pure claims costs associated with having different age groups than a competitor.




ontour said:


> Basically you should not be legislating around the fact that a 60 yer old stays with VHI even though if they bothered they could get a cheaper premium and or a better service from another provider.


Why not? Older people are nervous about moving provider so they don’t – the premium differential just isn’t enough to make them move in case the new insurer treats them differently to their existing one. I think there’s something on the VHI website that says that 50% of VHI’s members are over 50 compared with 15% of BUPA’s members – that’s a big difference in average cost. If there is no RE the younger people will continue to leave VHI forcing its premiums higher and higher until BUPA ends up with a monopoly.

Also, BUPA quite cleverly targeted younger people by offering subsidisies towards alternative therapies and better maternity benefits – there wasn’t a whole lot of marketing targeted at older people.


The Irish Times editorial this morning summarized nicely:
_“the Government has followed the correct, and indeed the only course of action open to it by not conceding to Bupa. The health system - for all its faults - rests on several pillars, one of which is widespread private health insurance based on community rating. Underpinning this principle that everybody pays the same rate regardless of age is the system of risk equalisation which involves financial transfers between insurers with younger member profiles and those with older members._
_Bupa knew this was the situation when it entered the Irish market 10 years ago and arguably should have structured its business appropriately. Instead it focused on younger, more profitable, members resulting in a situation where significant payments are now due following the triggering of risk equalisation. Bupa claims these payments render its business unviable. This is disputed by both its rival, the VHI, and their regulator, the Health Insurance Agency, lending credence to the theory that Bupa has merely decided to quit and bank its profits once the pickings are no longer as lucrative_.”


----------



## badgambler

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Vhi Premia are based in "intergenerational support"

When VHI was established, it was never given a wad of cash.  From day 1 the healthy were subsidising the unhealthy.  Generally that broke down as young providing for old.  That has followed right through to today.

VHI is not an investment company, therefore it will not collect and keep your collective premia till you need it.


Vhi has about 30% solvency ratio, so it won't be a huge jump to bring that up to 40% *if *they have a balanced book.


----------



## jprender

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Isnt this something that would have sorted itself out in time ?

The young people that BUPA have will be old in 20years.
The old people that VHI have will be dead in 20 years.

Sounds like a level playing field to me.


BTW, I have just noticed that VHI posted a profit in 2005.
What the hell is the problem ?


----------



## NuMarvel

*Re: Bupa leaving Ireland All Fermoy jobs lost*



jprender said:


> BTW, I have just noticed that VHI posted a profit in 2005.
> What the hell is the problem ?


 
Seems they also posted a profit in [broken link removed], [broken link removed], [broken link removed], [broken link removed]and [broken link removed].

What I can't understand is that if the vhi have been saying all along that they need RES money to stay afloat, then how have they managed over the last ten years without it?


----------



## NuMarvel

*Re: Bupa leaving Ireland All Fermoy jobs lost*



orka said:


> Also, BUPA quite cleverly targeted younger people by offering subsidisies towards alternative therapies and better maternity benefits – there wasn’t a whole lot of marketing targeted at older people.


 
BUPA had ads in the papers last year and were giving away a free health check to over 60s. They also gave better cover for cancer treatment, including screening. Seems to me, they targeted everyone...


----------



## jdwex

*Re: Bupa leaving Ireland All Fermoy jobs lost*



NuMarvel said:


> Seems they also posted a profit in [broken link removed], [broken link removed], [broken link removed], [broken link removed]and [broken link removed].
> 
> What I can't understand is that if the vhi have been saying all along that they need RES money to stay afloat, then how have they managed over the last ten years without it?


 
They went into a loss AT jULY 2006, I think. The problem is that there existing customer base is getting older, with a sharp increase in  health costs for the 50+ age group. 
The costs are higher again for the 70+ group, and according to Dan White VHI have 50 times the number of members in this goup as do BUPA


----------



## NuMarvel

*Re: Bupa leaving Ireland All Fermoy jobs lost*



jdwex said:


> They went into a loss AT jULY 2006, I think. The problem is that there existing customer base is getting older, with a sharp increase in health costs for the 50+ age group.
> The costs are higher again for the 70+ group, and according to Dan White VHI have 50 times the number of members in this goup as do BUPA


 
Surely, though, they had members getting older all the time? It's not as if 2006 was the year all their members "got old"?


----------



## nicelives

*Re: Bupa leaving Ireland All Fermoy jobs lost*



orka said:


> Are you sure BUPA would be forced into the red by this? They don’t publish results separately for Ireland which is surprising if it would make such a strong case for them.


Martin O'Rourke gave the Irish account details and the fact that BUPA had to operate in a much more restrictive way than Vhi was for the last ten years. BUPA UK seemed to be subbing the Irish operation for the first few years. 
http://www.rte.ie/rams/radio/latest/Fri/rte-todaywithpatkenny-tpk.smil

Probably won't happen with any other company coming in until we get a less fickle government, sure it's only 85 years since independence so we can't expect it to be a perfect market yet. I don't know what Mr Ahern was taking about last night in Brussels, sounded like he had been briefed about a different question or was drunk or something.


----------



## nicelives

*Re: Bupa leaving Ireland All Fermoy jobs lost*



NuMarvel said:


> Surely, though, they had members getting older all the time? It's not as if 2006 was the year all their members "got old"?


The average age for Vhi members is 44 and for BUPA it was 38, so with Vhi taking a hell of a lot more income than the age difference, it really comes down to inefficiencies. With Vhi's higher numbers of staff, higher unionisation/wages, much more costly offices in the centre of the capital and more generous deals to the hospitals and taxi transfers, I'm not surprised they can't compete.


----------



## jdwex

*Re: Bupa leaving Ireland All Fermoy jobs lost*



nicelives said:


> The average age for Vhi members is 44 and for BUPA it was 38, so with Vhi taking a hell of a lot more income than the age difference, it really comes down to inefficiencies. With Vhi's higher numbers of staff, higher unionisation/wages, much more costly offices in the centre of the capital and more generous deals to the hospitals and taxi transfers, I'm not surprised they can't compete.


 
The thing is that vhis costs as a %of revenue are within sector norms at 7.5% - they can runas a high as 12 % in some companies.

The average age doesn'ty tell us an awful lot (and Sean Barrett knows this well), what is important is the relative proportions of the 60+ in each company as a proportion of their subscriber base.


----------



## Slash

*Re: Bupa leaving Ireland All Fermoy jobs lost*

In order to understand this thing, we need to look at who will benefit from the exit of BUPA from the Irish market. Two entities will benefit from the extra business that will come their way: 1) VHI, and 2) VIVAS. No need to say anymore about VHI, because many people have given their opinion about that company. 

VIVAS is worth a closer look. VIVAS is backed by AIB Bank and by IIU, the investment vehicle of Demot Desmond. DD also happens to be a major fund raiser (i.e. contributor) for Fianna Fail, and one of many people who gave cash to CJH.

Conspiracy theory? Perhaps. But, earlier this year, Michael McDowell stated very forcefully that he would move to close down all private gaming clubs (i.e. casinos) in Dublin. However, someone whispered in his ear that DD owns one of the biggest gaming clubs in Dublin, and told him how the real world works. As a result, McDowell did a little-reported U turn and announced how he would move to "regulate" the private gaming clubs. Government policy should be decided by the government, not by zillionaires.

This may seem far fetched, but......watch this space...............

Oh, yes, and the reaction of our Taoiseach? "Ah, Jayziz, who are ya coddin'? Sure i don't understand all dis insurance stuff at all." Great. Fills me full of confidence.


----------



## roland

*Re: Bupa leaving Ireland All Fermoy jobs lost*

The only people benefiting from BUPA's exit are BUPA themselves.  They are a total disgrace.  It seems quite clear their strategy was to come in, cream as much money as they could until risk equalisation came in ('cos they knew it would), prolong the inevitable for as long as they could through court cases etc., and then when time was called they ran off in a fake hissy fit with all the huge profits they have made to date.  Brilliant.  

Sure we can argue about the rights and wrongs of risk equalisation, but BUPA entered the market knowing full well what the position was... they distracted us all by posturing and whining about how 'unfair' it all was, when all they wanted to do was divert attention from the huge profits they kept building up.  They relentlessly targeted young members whilst benefiting from a market that 'forced' them to charge those young members a rate that well exceeded the claims they would have to pay.  For the 10 years or so that they are here, they've made a relative fortune.  Poor BUPA.  Poor victims.  That was the strategy all along.  Nice job.  Don't be suckered into thinking they actually really believed that risk equalisation would never come in.  Of course, the only victims here are joe public who have paid them this money.


----------



## jprender

*Re: Bupa leaving Ireland All Fermoy jobs lost*

That may be so but this whole situation has arisen due to one thing.

Our government are a group of gob-daws.


----------



## scuby

*Re: Bupa leaving Ireland All Fermoy jobs lost*



nicelives said:


> The average age for Vhi members is 44 and for BUPA it was 38, so with Vhi taking a hell of a lot more income than the age difference, it really comes down to inefficiencies. With Vhi's higher numbers of staff, higher unionisation/wages, much more costly offices in the centre of the capital and more generous deals to the hospitals and taxi transfers, I'm not surprised they can't compete.




don't they own their own building in the various locations ? 
and would a taxi transfer not be cheaper than paying for an ambulance, nurse etc..
Bupa knew when they entered the market Risk Equal was going to come in, and they set up anyway ... the main reason they are cheaper than vhi is probably because they did not charge enough to cover the cost of the money they would have to pay into risk equal...
 tough on the staff..... heard bertie on the radio the other day at lunch time, and he was giving out about bupa, would love to have heard the meeting they had with Bupa when they were trying to sort things out.....


----------



## NuMarvel

*Re: Bupa leaving Ireland All Fermoy jobs lost*



roland said:


> The only people benefiting from BUPA's exit are BUPA themselves. They are a total disgrace. It seems quite clear their strategy was to come in, cream as much money as they could until risk equalisation came in ('cos they knew it would), prolong the inevitable for as long as they could through court cases etc., and then when time was called they ran off in a fake hissy fit with all the huge profits they have made to date. Brilliant.
> 
> Sure we can argue about the rights and wrongs of risk equalisation, but BUPA entered the market knowing full well what the position was... they distracted us all by posturing and whining about how 'unfair' it all was, when all they wanted to do was divert attention from the huge profits they kept building up. They relentlessly targeted young members whilst benefiting from a market that 'forced' them to charge those young members a rate that well exceeded the claims they would have to pay. For the 10 years or so that they are here, they've made a relative fortune. Poor BUPA. Poor victims. That was the strategy all along. Nice job. Don't be suckered into thinking they actually really believed that risk equalisation would never come in. Of course, the only victims here are joe public who have paid them this money.


 
Surely we don't actually think an international company would act in such a brazen and cavalier attitude? Especially when that company's raison d'etre is taking care of people's health? It seems a bit silly that any company would take that kind of chance with people's jobs and people's health....

And, as someone else pointed out, bupa's supposed to be a not for profit organisation. They hardly decided that the irish operation was when they'd change this??


----------



## scuby

*Re: Bupa leaving Ireland All Fermoy jobs lost*

someone was telling me over the weekend that a girl had given in her notice to her job in fermoy a week ago to join Bupa, and now she has no job, and she was not the only one !! surely Bupa knew at that stage they were going to pull out, and why did they give her a false job ?


----------



## ubiquitous

*Re: Bupa leaving Ireland All Fermoy jobs lost*



roland said:


> The only people benefiting from BUPA's exit are BUPA themselves.  They are a total disgrace.  It seems quite clear their strategy was to come in, cream as much money as they could until risk equalisation came in ('cos they knew it would), prolong the inevitable for as long as they could through court cases etc., and then when time was called they ran off in a fake hissy fit with all the huge profits they have made to date.  Brilliant.
> 
> ...Poor BUPA.  Poor victims.  That was the strategy all along.  Nice job.  Don't be suckered into thinking they actually really believed that risk equalisation would never come in.  Of course, the only victims here are joe public who have paid them this money.



Have you any evidence to support this conspiracy theory? eg Have BUPA done this previously in any other country?


----------



## orka

*Re: Bupa leaving Ireland All Fermoy jobs lost*



roland said:


> It seems quite clear their strategy was to come in, cream as much money as they could until risk equalisation came in ('cos they knew it would), prolong the inevitable for as long as they could through court cases etc., and then when time was called they ran off in a fake hissy fit with all the huge profits they have made to date. Brilliant.


 


ubiquitous said:


> Have you any evidence to support this conspiracy theory? eg Have BUPA done this previously in any other country?


 
Nothing except the fact that they did come in, cream as much money as they could until RE came in and then when the time came, ran off with their huge profits... (or at least are threatening to)

According to the judge in the most recent case, they made an average underwriting profit of 18% for the past 4 years. I'm not entirely sure how health insurers are capitalised but if it's similar to non-life insurers (which I think it is), this would equate to a return on capital of about 45% *per annum* for 4 years. That is a pretty decent return.

And, unsurprisingly, the breaking news this morning is that BUPA will consider 'a reasonable proposal' from the government to let them stay in the Irish market - something enabling 'modest returns'. Wonder what they define as 'modest'?


----------



## Glenbhoy

*Re: Bupa leaving Ireland All Fermoy jobs lost*



NuMarvel said:


> And, as someone else pointed out, bupa's supposed to be a not for profit organisation. They hardly decided that the irish operation was when they'd change this??


Sarcasm?
Am I correct in thinking that BUPA Ireland had 3 times the profitability that BUPA UK had?  I still don't believe they'll go, they're playing poker imo, they'll get some sort of concession from the govt and they'll stay, with both parties being able to save face.  
What I would really like to see are their Irish operations accounts for the past 10 yrs and the realistic projections for the next 10, after the risk equalisation payments have been applied. 
Finally, does it matter if they're here or not - at least with VHI, profits are essentially re-invested in the health service, so even if they're more inefficient the net benefit to the health service is unlikely to be any worse.


----------



## ubiquitous

*Re: Bupa leaving Ireland All Fermoy jobs lost*



Glenbhoy said:


> at least with VHI, profits are essentially re-invested in the health service, so even if they're more inefficient the net benefit to the health service is unlikely to be any worse.



This argument could be used to justify any past or present State monopoly or cost overrun - for example Aer Lingus flights to UK in the 80s, or the vast sums overspent on road projects. I don't think it holds water.


----------



## ubiquitous

*Re: Bupa leaving Ireland All Fermoy jobs lost*



orka said:


> Nothing except the fact that they did come in, cream as much money as they could until RE came in and then when the time came, ran off with their huge profits... (or at least are threatening to)



Yes, but have they done this elsewhere? If so, this would support your theory.


----------



## orka

*Re: Bupa leaving Ireland All Fermoy jobs lost*



ubiquitous said:


> Yes, but have they done this elsewhere? If so, this would support your theory.


 
If you give me a list of countries where they entered late into a previously monopolistic market with an opportunity to profit excessively from a short-term delay in implementing a mechanism designed to prevent excessive profit taking and market de-stabilisation, then I will be happy to research each of them and let you know whether they've done this before.  I would provide the list myself but I don't know of any such country - sorry.

As you know very well, the theory cannot be proved but neither can it be disproved.  The weight of evidence is against them though - the marketing, the profits, the attempts to blackmail the government, the non-disclosure of detailed accounts.  What is the evidence for the defense - beyond wooly statements from Martin O'Rourke?


----------



## NuMarvel

*Re: Bupa leaving Ireland All Fermoy jobs lost*



Glenbhoy said:


> Finally, does it matter if they're here or not - at least with VHI, profits are essentially re-invested in the health service, so even if they're more inefficient the net benefit to the health service is unlikely to be any worse.


 
So you think that the lack of competitors is GOOD for people with health insurance?


----------



## polaris

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Somebody mentioned it a few pages back but I'll repeat it again; a proportionate transfer of elderly suscribers from VHI to both BUPA and VIVAS is the best solution to this.

It levels the playing field and neither BUPA or VIVAS will then be subsidising VHI's supposed inefficiencies.


----------



## scuby

*Re: Bupa leaving Ireland All Fermoy jobs lost*



polaris said:


> Somebody mentioned it a few pages back but I'll repeat it again; a proportionate transfer of elderly suscribers from VHI to both BUPA and VIVAS is the best solution to this.
> 
> It levels the playing field and neither BUPA or VIVAS will then be subsidising VHI's supposed inefficiencies.


 

so how would you choose who goes or stays with vhi ?


----------



## ClubMan

*Re: Bupa leaving Ireland All Fermoy jobs lost*



scuby said:


> so how would you choose who goes or stays with vhi ?


Maybe we could build a _TV _reality/game show around it?


----------



## ubiquitous

*Re: Bupa leaving Ireland All Fermoy jobs lost*



orka said:


> If you give me a list of countries where they entered late into a previously monopolistic market with an opportunity to profit excessively from a short-term delay in implementing a mechanism designed to prevent excessive profit taking and market de-stabilisation, then I will be happy to research each of them and let you know whether they've done this before.  I would provide the list myself but I don't know of any such country - sorry.



I can't see how Ireland is any different from any other country where the health insurance market has been opened up to competition?

You admit that you have no evidence to back up your theory nor can you give any examples of its application elsewhere. As such it doesn't appear too convincing, to say the least.


----------



## scuby

*Re: Bupa leaving Ireland All Fermoy jobs lost*

bring on the american insurance way of doing things, no need for bupa to pay the vhi then..... just pay 5/6 times what we are paying now, even more if your older, smoker, family history cancer, dodgy hips, genetic disease'e etc etc.... personally if it means everyone paying the same amount of money for the same insurance policy, then i'm for it... Bupa are bluffing, first they were leaving now listening to any reasonable offer from the gov...


----------



## scuby

*Re: Bupa leaving Ireland All Fermoy jobs lost*



ClubMan said:


> Maybe we could build a _TV _reality/game show around it?


 

that could be good... get derek mooney to be the host.... BBBBBYYYYYEEEEEEEEEE


----------



## polaris

*Re: Bupa leaving Ireland All Fermoy jobs lost*



scuby said:


> so how would you choose who goes or stays with vhi ?


 
List all Irish PHI subscribers older than 60 alphabetically, divide them into 3 groups proportionate to the current market share of the 3 companies and dole them out.


----------



## ClubMan

*Re: Bupa leaving Ireland All Fermoy jobs lost*

What about those who don't want to move? And don't you have to do this on a regular (e.g. annual) basis? All this meddling with the market really doesn't sound like a good idea. Better to somehow (the $6M question!) make the market more attractive to other service providers who will come in of their own accord.


----------



## scuby

*Re: Bupa leaving Ireland All Fermoy jobs lost*



polaris said:


> List all Irish PHI subscribers older than 60 alphabetically, divide them into 3 groups proportionate to the current market share of the 3 companies and dole them out.


 
that idea would be shot down... making people move ! so much for choice and freedom to choose your own insurance company.


----------



## nicelives

*Re: Bupa leaving Ireland All Fermoy jobs lost*



scuby said:


> and would a taxi transfer not be cheaper than paying for an ambulance, nurse etc..


The problem being that Vhi are paying out the cost based on an ambulance transfer when in fact the reality was a taxi. Big argument on Joe Duffy about 9 months ago on the incredible wastage of Vhi with calls from peple who queried the bills the hospitals sent them.


scuby said:


> that idea would be shot down... making people move ! so much for choice and freedom to choose your own insurance company.


Is the Australian system that Mary Harney's office is always admiring that the over 65's choose whatever insurance company they want to be with and then the maths in done later. Risk Equalistaion based only on the over 65's and the cost sharing being much more stictly and fairer controlled than the Irish proposal.


----------



## baby_tooth

*Re: Bupa leaving Ireland All Fermoy jobs lost*

if they could sort out the public health service, got rid of all the wasteful admin and started delivering value for money, then there wouldn't be a need for all this extra insurance.!...


----------



## roland

*Re: Bupa leaving Ireland All Fermoy jobs lost*



ubiquitous said:


> Have you any evidence to support this conspiracy theory? eg Have BUPA done this previously in any other country?


 
Without having access to board papers, or the like, I clearly can't prove the theory beyond all doubt. However, the evidence is heavily weighted in favour of this 'conspiracy theory' as you term it. BUPA entered a market knowing full well RE would be implemented. It's preposterous to believe that their strategy was based on an assumption that RE wouldn't come in. If a market with RE is unprofitable for them, then their numbers must have shown that it only made sense for them to stay in whilst the introduction of RE was being deferred. Given that, the best or perhaps only sensible strategy would have been to keep trying to defer the introduction of RE and target the youngest members you can. They achieved this. If the market with RE is unprofitable for them, why else would they have entered this market?


----------



## scuby

*Re: Bupa leaving Ireland All Fermoy jobs lost*



			
				nicelives said:
			
		

> *The problem being that Vhi are paying out the cost based on an ambulance transfer when in fact the reality was a taxi. Big argument on Joe Duffy about 9 months ago on the incredible wastage of Vhi with calls from peple who queried the bills the hospitals sent them.*




surely it's then hospital that called the taxi, as there was no ambulance available to transfer the patients, as they must not have been that ill, and then if the vhi did not pay for it, people would be giving out about that... by using a taxi they are leaving an ambulance free for accidents, real emergencies etc etc.... 
don't forget the hospitals are not going to be out of pocket, they will want to get the money back from somewhere !


----------



## ubiquitous

*Re: Bupa leaving Ireland All Fermoy jobs lost*



roland said:


> BUPA entered a market knowing full well RE would be implemented. It's preposterous to believe that their strategy was based on an assumption that RE wouldn't come in.



Are you 100% sure that this is the case? BUPA commenced trading here 10 years ago. They obviously made their decision to enter the Irish market at least a year or two previously, ie in the period from 1994-1996, during which time we had FF/Lab and Rainbow governments. The country has changed irrevocably in the meantime as have government policies in many areas. In fact there is hardly any aspect of government policy that would have remained static in the intervening 11-12 years. Anyone who claims that there was 100% public certainty in 1994-96 about the government's health insurance policies by 2005-2006 is talking nonsense.



roland said:


> Given that, the best or perhaps only sensible strategy would have been to keep trying to defer the introduction of RE and target the youngest members you can. They achieved this. If the market with RE is unprofitable for them, why else would they have entered this market?



Your theory fails to recognise the basic fact that BUPAs argument is not with risk equalisation per se but the calculation of same. One would have expected that the figures involved in the whole RE exercise, to be credible, would have borne some relationship to the profitability of the parties concerned. In that context, the proposed levying of €161m from a company making circa €60m per year seems odd to say the least. Frankly this reminds me of Ray Burke's attempts to cap RTE's profits to benefit Century Radio in the early 1990s. And we all know what happened there...


----------



## Glenbhoy

*Re: Bupa leaving Ireland All Fermoy jobs lost*



ubiquitous said:


> In that context, the proposed levying of €161m from a company making circa €60m per year seems odd to say the least. Frankly this reminds me of Ray Burke's attempts to cap RTE's profits to benefit Century Radio in the early 1990s. And we all know what happened there...


Is the 161M a one-off payment with an additonal (smaller) levy each year thereafter?  That would not seem excessive in the context of €60M p.a profits.
But you are right this is the one thing that has always perplexed me about the situation, one would have presumed that the levy would be a percentage of profits - obviously a fixed sum in excess of profits would not make sense.  What we really need I suppose is an independent assessment of both BUPA profitability and what the likely RE payments will be on an ongoing basis (call me cynical, but I don't believe the figures being bandied around by BUPA).


----------



## polaris

*Re: Bupa leaving Ireland All Fermoy jobs lost*



ClubMan said:


> What about those who don't want to move? And don't you have to do this on a regular (e.g. annual) basis? All this meddling with the market really doesn't sound like a good idea. Better to somehow (the $6M question!) make the market more attractive to other service providers who will come in of their own accord.


 
Community rating/risk equalisation etc is meddling with this market already. I'm sure there would be some level of "outrage" with this proposal but the 3 companies provide more or less the same degree of cover and if transferring elderly subscribers from VHI to the other two helps maintain the current level of market competitiveness then it would be worth it.  

Short of new players entering the market, it need only be done once to level the playing field and all 3 companies can then compete agressively for younger, more profitable members. To soften the blow anyone forcibly removed from their original insurer could be allowed return after 12 months. Inertia would have taken over by then.


----------



## Glenbhoy

*Re: Bupa leaving Ireland All Fermoy jobs lost*



NuMarvel said:


> So you think that the lack of competitors is GOOD for people with health insurance?


I don't think it's neccessarily bad, healthcare in my opinion is not a normal good or service, if it were, we would be effectively condemming large numbers of less well off people to death if they happened to get an illness requiring expensive treatment.  Whilst competition generally eradicates inefficiencies, in the case of health insurance the only real competition would have to remove all pretences of community rating, in the absence of such an undesireable situation we can't have real competition anyway, hence it might be as well to have a service provider who pumps all their revenue back into the health system.


----------



## Omega

*Re: Bupa leaving Ireland All Fermoy jobs lost*

_miss spelling - ?????_


----------



## orka

*Re: Bupa leaving Ireland All Fermoy jobs lost*



Glenbhoy said:


> ..the one thing that has always perplexed me about the situation, one would have presumed that the levy would be a percentage of profits - obviously a fixed sum in excess of profits would not make sense. What we really need I suppose is an independent assessment of both BUPA profitability and what the likely RE payments will be on an ongoing basis (call me cynical, but I don't believe the figures being bandied around by BUPA).


 
The RE transfer is based on cost of claims, not on overall profitability so if two companies had equal market share and one (A) had 70M cost of claims + 30M expenses (total 100M) and the other (B) had cost of claims 90M and 10M expenses (so total 100M) - RE would transfer 10M of claims from company B to company A so that they both had the same cost of claims (80M). Company A then has greater overall costs (110M) than company B (90M) which may make it unprofitable - because of its higher expenses, not because of RE.

This is a bit of a simplification but it gives a reasonable idea of how it operates.

Agree that an independent assessment of BUPA's profitability would be v enlightening - any commentators who have been privy to this info (politicians, judges) seem to agree that their profits have been very large.


----------



## NuMarvel

*Re: Bupa leaving Ireland All Fermoy jobs lost*



orka said:


> The RE transfer is based on cost of claims, not on overall profitability so if two companies had equal market share and one (A) had 70M cost of claims + 30M expenses (total 100M) and the other (B) had cost of claims 90M and 10M expenses (so total 100M) - RE would transfer 10M of claims from company B to company A so that they both had the same cost of claims (80M). Company A then has greater overall costs (110M) than company B (90M) which may make it unprofitable - because of its higher expenses, not because of RE.
> 
> This is a bit of a simplification but it gives a reasonable idea of how it operates.
> 
> Agree that an independent assessment of BUPA's profitability would be v enlightening - any commentators who have been privy to this info (politicians, judges) seem to agree that their profits have been very large.


 
This does give a good picture of how it works, thanks. But what if a company has a lower claims costs because it's driven better agreements with the medical centres/hospitals etc or if it incentivises it's member to get health checks? What if it takes steps to keep it's claims costs down? Shouldn't this also be recognised?


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## scuby

*Re: Bupa leaving Ireland All Fermoy jobs lost*



NuMarvel said:


> But what if a company has a lower claims costs because it's driven better agreements with the medical centres/hospitals etc or if it incentivises it's member to get health checks? What if it takes steps to keep it's claims costs down? Shouldn't this also be recognised?



well with hospitals charging the higher rates, like the private hospitals, due to the cost of drugs, high cost of wages, from consultants, nurses pay agreements etc and with patients demanding the insurance comps pay their claim in full, and them only being able to haggle to a certain degree with the hospital, it's a bit hard for the comps to keeps costs down.....

one interesting point is that in australia, its the hospitals that have to tender to the likes of bupa, vhi and vivas to get them to cover their subscribers in their hospitals. again thats only if there are too many private hospitals in a catchment area...


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## nicelives

*Re: Bupa leaving Ireland All Fermoy jobs lost*



scuby said:


> [/b]
> 
> surely it's then hospital that called the taxi, as there was no ambulance available to transfer the patients, as they must not have been that ill, and then if the vhi did not pay for it, people would be giving out about that... by using a taxi they are leaving an ambulance free for accidents, real emergencies etc etc....
> don't forget the hospitals are not going to be out of pocket, they will want to get the money back from somewhere !


 
Exactly but €500 plus for a taxi transfer from one Dublin hospital to another is what the Vhi pay out, there's the wastage. All this was highlighted on Joe Duffy, not my own personal experience as I'm with BUPA.


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## roland

*Re: Bupa leaving Ireland All Fermoy jobs lost*



ubiquitous said:


> ...the proposed levying of €161m from a company making circa €60m per year seems odd to say the least.


 
There doesn't seem to be any certainty about the figure of €161m.  BUPA are bandying this around like it's fact.  Someone from VHI was on Questions and Answers last night saying that the actual calculation in the first 6 months of 2006 would come to €7.7m!  If that is correct, then it seems highly unlikely that BUPA would have to pay anything like €161m.  On a very simple basis, if you double it up for a full year then you're looking at a figure closer to €15m.  That is a long long away from €161m.  Maybe they're both way off the mark.  But it would help BUPA's case if they revealed how they came to €161m.  They seem to be unusually shy about revealing any of their figures.


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## orka

*Re: Bupa leaving Ireland All Fermoy jobs lost*



NuMarvel said:


> This does give a good picture of how it works, thanks. But what if a company has a lower claims costs because it's driven better agreements with the medical centres/hospitals etc or if it incentivises it's member to get health checks? What if it takes steps to keep it's claims costs down? Shouldn't this also be recognised?


 
Yes it should - and it is (or at least the system attempts to AFAIK). I gave the simplified version above but the actual mechanics are more complex based on standardised/expected costs at each age weighted by the age profile of each insurer. So in my example, it wouldn't strictly be: A has cost of claims 70M and B has cost of claims 90M - more along the line of: 'given A's age profile, the standardised cost of claims is 70M and given B's age profile, the standardised cost of claims is 90M - so there is a RE transfer of 10M'. Now if A actually only spent 60M due to efficiencies (no €500 taxis, shorter hospital stays etc.), then they get to keep that 10M efficiency improvement.


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## scuby

*Re: Bupa leaving Ireland All Fermoy jobs lost*



nicelives said:


> Exactly but €500 plus for a taxi transfer from one Dublin hospital to another is what the Vhi pay out, there's the wastage. All this was *highlighted on Joe Duffy*, not my own personal experience as I'm with BUPA.




sure, sure, sure.... me screens are lighting up here......  gooood afternoon to yuuuooooooooo, mary in clontarf......


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## ubiquitous

*Re: Bupa leaving Ireland All Fermoy jobs lost*



roland said:


> Someone from VHI was on Questions and Answers last night saying that the actual calculation in the first 6 months of 2006 would come to €7.7m!  If that is correct, then it seems highly unlikely that BUPA would have to pay anything like €161m.  On a very simple basis, if you double it up for a full year then you're looking at a figure closer to €15m.  That is a long long away from €161m.



Sorry but it doesn't make sense for a company making "huge profits" (your own words) to abandon a market for the sake of paying an extra cost of €7-€15m per year?


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## orka

*Re: Bupa leaving Ireland All Fermoy jobs lost*



ubiquitous said:


> Sorry but it doesn't make sense for a company making "huge profits" (your own words) to abandon a market for the sake of paying an extra cost of €7-€15m per year?


Maybe not but do you have any evidence to back up this theory that they won't abandon the market for €15M a year? Have they stayed put in other countries when faced with paying an extra €15M a year?

VHI say it's 15M p.a., BUPA say it's 54M p.a. - so the real answer is somewhere in the middle - it's not just 15M pa that they are abandoning a market for - as roland accepted and a more complete quote would have clarified.


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## ubiquitous

*Re: Bupa leaving Ireland All Fermoy jobs lost*

Sorry, I did not say that BUPA "won't abandon the market for €15M a year". I merely said that it would not make sense for them to do so, if they are earning the "huge profits" alleged by Roland.

If the business is viable after paying RE, then I am puzzled as to why BUPA didn't decide to sell the business to another operator rather than unilaterally exit the market.

Unlike you, I don't claim to have all (or indeed any) of the answers, so your request for evidence to support my comments is a bit superfluous?


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## orka

*Re: Bupa leaving Ireland All Fermoy jobs lost*



ubiquitous said:


> Unlike you, I don't claim to have all (or indeed any) of the answers


 
???

Where do I claim to have all (or indeed any) of the answers??

I joined the thread to add some information (and some views) to a debate that was really just a big uninformed moan-fest. I don't have all the answers because BUPA do not publish detailed accounts and information, nor do they publish their board papers and internal correspondence and I don't have access to interview Martin O'Rourke, other senior executives, accountants, auditors and actuaries. And I don't have the VHI/VIVAS info/access either nor access to Mary Harney's department - all which I would need to be able to work out all the answers. I do, however, know how risk equalisation works and I'm happy if even a few readers of this thread know a bit more about it now.


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## ubiquitous

*Re: Bupa leaving Ireland All Fermoy jobs lost*



orka said:


> Where do I claim to have all (or indeed any) of the answers??



You do say in your most recent post...


orka said:


> I do, however, know how risk equalisation works ...


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## Glenbhoy

Well with the rebuff of AXA's approach (why they would want to buy a loss making entity I don't know - maybe to launder some of those super-normal motor insurance profits??), it seems that maybe BUPA are not quite as set on leaving the irish market as once they seemed.


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## kit

Well I got my letter in the post today confirming Bupa won't be renewing my membership, so if they do decide to return to the market, this is one customer they're guaranteed not to win back!

I find is so sickening that they were giving it the old "it's the public who will suffer" line, and being sorry for their workforce, but when another company offer to take over the operation, they refuse point blank. Nice to see how much they care really!


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## ClubMan

kit said:


> Well I got my letter in the post today confirming Bupa won't be renewing my membership, so if they do decide to return to the market, this is one customer they're guaranteed not to win back!


Even if they were more competitive than others?


> I find is so sickening that they were giving it the old "it's the public who will suffer" line, and being sorry for their workforce, but when another company offer to take over the operation, they refuse point blank. Nice to see how much they care really!


 Maybe they weren't made an offer that they couldn't refuse?

For the record I used to be with _BUPA _and always found them better organised that _VHI _but have been with _VHI _for the past few years because the job chose them and pays for it (_BIK_).


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## kit

They would have to be very very competitive for me to even consider them ever again. 50 or 60 quid a year certainly wouldn't tempt me!

As regards the Axa offer, surely something is better than nothing? If their reasoning is, as they say, that they may decide to re-enter the market, who's to say Axa (or some other company) won't have stated up by then? It's money for old rope really. 

And if the do decide to re-enter the market, its not as if they'd automatically get their previous customers back, well not this one anyways!


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## scuby

they would not sell up and give their comp here in ireland to axa, as they are a competitor in england... would be a major kick in the goolies..


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## NuMarvel

kit said:


> I find is so sickening that they were giving it the old "it's the public who will suffer" line, and being sorry for their workforce, but when another company offer to take over the operation, they refuse point blank. Nice to see how much they care really!


 
This is what I'm confused about. AXA are reported to say they're in "confidential & delicate" negotiations with BUPA about taking over the business, but BUPA say they've never spoken to AXA and they're not in negotitations (see [broken link removed]). I mean, either negotiations are happening or they aren't!

I wonder though is this all pie in the sky? AXA haven't said when they plan on starting the health insurance business, I think it took VIVAS over a year to actually set up, and I remember that Bank of Ireland were reported to be thinking about it at one stage, but that never transpired (naturally, I can't find a link to that anywhere, but I remember it was definitely reported!).


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## scuby

suppose the only thing is,vivas had to start from the beginning where as axa, have branches around the country, data bases on their system to target mail people, and have staff on phones, claims etc, might be alot easier for them to get up and running quicker.....


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## orka

NuMarvel said:


> I wonder though is this all pie in the sky? AXA haven't said when they plan on starting the health insurance business, I think it took VIVAS over a year to actually set up, and I remember that Bank of Ireland were reported to be thinking about it at one stage, but that never transpired (naturally, I can't find a link to that anywhere, but I remember it was definitely reported!).


 
They haven't said they are interested in starting from scratch the way VIVAS did - they want to take over BUPA's business not start one of their own.  If they can't take over BUPA, they probably won't set up as a health insurer.


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## scuby

interesting to see axa think they can make a profit and bupa can't !
maybe it's bupa who are not very efficient after all


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## NuMarvel

scuby said:


> interesting to see axa think they can make a profit and bupa can't !
> maybe it's bupa who are not very efficient after all


 
Well, _if_ AXA are only interested in starting health insurance by taking over bupa's members (as theroised in another post) then maybe their only interested in short term profit. They'd generate the €60 off million that bupa said they'd make in the next three years, have the three year delay on the risk payments and only then would have to start paying. 

I don't know why, but I just think that the timing of all of this is very convenient for everyone. I don't know what I'm implying, but I have to ask why AXA haven't come into the market before now if they were serious about offering cover. The risk payments obviously aren't a deterrent and with all the reports that Mary Harney is waiting on (competiton authority report and the review of profitability levels in the market), you'd think that a company would wait to see what transpires. I'm not saying the others are golden children either, but for some reason, I look at this and wonder what's really going on...


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## Glenbhoy

NuMarvel said:


> I don't know why, but I just think that the timing of all of this is very convenient for everyone. I don't know what I'm implying, but I have to ask why AXA haven't come into the market before now if they were serious about offering cover. The risk payments obviously aren't a deterrent and with all the reports that Mary Harney is waiting on (competiton authority report and the review of profitability levels in the market), you'd think that a company would wait to see what transpires. I'm not saying the others are golden children either, but for some reason, I look at this and wonder what's really going on...


Firstly, with the _ahem _'exit' of BUPA, that would free up a lot of room in the market for a new entrant, there would more opportunities to generate profit than previously.
The second point is that they obviously feel that BUPA have been guilty of telling little white lies as to the level of payments that will be required for equalisation.


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## Sunny

Glenbhoy said:


> Firstly, with the _ahem _'exit' of BUPA, that would free up a lot of room in the market for a new entrant, there would more opportunities to generate profit than previously.
> The second point is that they obviously feel that BUPA have been guilty of telling little white lies as to the level of payments that will be required for equalisation.


 
I don't understand why AXA should get a three year holiday on risk equalisation payments if they take over BUPA's business. I can understand it if it was a new entrant building up a client base from scratch and they needed time to gain market share and build a capital surplus. I for one would be very suspicious if AXA just took over BUPA's business that they don't have any long term plans to remain here. What odds on BUPA buying back the business in 3 years time?


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## Barley

My tuppenceworth is that I don't care who takes over Bupa or if anyone does. This consumer will be switching to VHI on March 1st as they have a long track record in the country and, after the Bupa fiasco, I'd prefer to stick with a company who are a bit more reliable, albeit it a bit more expensive.

Also, if Axa or anyone else take over Bupa then I believe that yes, they should take on the risk equalisation payments as well. I can't see why they shouldn't given that they'll have the same younger, less risky customer base.


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## NuMarvel

Glenbhoy said:


> Firstly, with the _ahem _'exit' of BUPA, that would free up a lot of room in the market for a new entrant, there would more opportunities to generate profit than previously.
> The second point is that they obviously feel that BUPA have been guilty of telling little white lies as to the level of payments that will be required for equalisation.


 
To be fair, with three insurers, the health insurance market was never exactly a crowded place to begin with. Yes, it makes sense to take over an existing business, but with AXA's existing infrastructure (call centres, offices, experience, etc), they presumably could easily set up when ever they want and I imagine with reasonable start up costs. The figures haven't been mentioned anywhere, but have AXA said how much they' re willing to pay bupa for the business?

As for your second point about the level of payments, [broken link removed]should clarify things. For the period of July 05 to Dec 05, BUPA would have owed €20 million. Across three years that works out at €120 million.... 

*EDIT*: Sorry, I don't think the link is working properly. Try this: [broken link removed]


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## Budgie

Personnally I am glad to see BUPA's bluff being called.  AXA have really spoiled the bullying of the govt by them.  I am not saying that risk eq is perfect but BUPA knew about it before they arrived.  

BUPA's pirate adventure in the Irish market is over.  Good riddance!


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## nicelives

Barley said:


> ....Also, if Axa or anyone else take over Bupa then I believe that yes, they should take on the risk equalisation payments as well. I can't see why they shouldn't given that they'll have the same younger, less risky customer base.


Mary Harney said as much on Pat Kenny during the week, but from reading today's papers it looks like Axa bizarrely think they should get the 3 years grace even though they plan to buy an 'existing' business.
I don't know, I'm less impressed with Bupa stance over the last week than I was before and will most likely be moving to Vhi.


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