The European Commission yesterday approved an ambitious risk equalisation scheme for health insurance in the Netherlands that will require €15 billion in state aid.
The news comes as the Government begins considering a controversial recommendation to trigger risk equalisation in the Irish market that could result in Bupa paying an estimated €37 million to its State-owned rival, the VHI.
British-owned Bupa last week threatened to leave the Irish market if the Tánaiste and Minister for Health, Mary Harney, implements the risk equalisation scheme proposed by the Health Insurance Authority (IHA).
Risk equalisation is likely to be introduced because the Government favours a community rating system for health insurance. This means that people pay the same price for the same level of cover, no matter what their age or state of health.
To level the playing pitch, insurers with large numbers of low-risk, younger customers must effectively pass on some of their profits to competitors with a high proportion of older, high-risk customers.
In the Republic, that means Bupa will have to pay money to the VHI under a risk equalisation system. Vivas will not be affected for three years. Bupa has begun proceedings in the the European Court of Justice to prevent the Government introducing risk equalisation.
The EU Commission yesterday approved a scheme proposed by the Dutch government, where the state itself will make the risk equalisation payments, estimated at €15 billion.
