BUPA leaving Ireland

[Nermal]

Re: Bupa leaving Ireland All Fermoy jobs lost

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.

 

[askalot]

Re: Bupa leaving Ireland All Fermoy jobs lost

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!

 

[orka]

Re: Bupa leaving Ireland All Fermoy jobs lost

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?

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.

 

[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

 

[Nermal]

Re: Bupa leaving Ireland All Fermoy jobs lost

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.

 

[askalot]

Re: Bupa leaving Ireland All Fermoy jobs lost

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.

 

[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.

 

[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.

 

[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

 

[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 !!!

 

[askalot]

Re: Bupa leaving Ireland All Fermoy jobs lost

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.

 

[slave1]

Re: Bupa leaving Ireland All Fermoy jobs lost

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

 

[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 ;-(

 

[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?

 

[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!!!!!!

 

[orka]

Re: Bupa leaving Ireland All Fermoy jobs lost

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.

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.

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.

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.

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.

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.

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.

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

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

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...