CAN BUPA, Britain's health insurance company penetrate VHI's stranglehold on the Irish health insurance market BUPA's announcement last month that they were going to start offering health plans by the end of this year received a mixed welcome, but the general consensus appears to be that competition will certainly give consumers a better choice of cover, even if the community rating system continues to require that insurers offer the same service at the same price regardless of age.
The BUPA announcement mainly focused on the organisational structure of the Irish board of management and lofty predictions about how consumers "will benefit from increased competition by the arrival of a strong, international, innovative health care company (that) will play a positive and active role etc.
It was very short on the sort of products and services it will offer, "mainly because these are very early days yet. Staff still need to be recruited, offices need to be set up and the company has yet to decide, the structure of the product, insisted BUPA Ireland spokesperson when we contacted them last week.
BUPA also operates in Spain, and spokespersons here and in London emphasised that BUPA Ireland's insurance policies will be very different from the ones available either in Britain or Spain, countries where community rating does not apply and where health insurers can "cherry pick" for whatever group of customers they want.
There is no question that BUPA's costs are related to age and health circumstances, but this is the system that operates everywhere that community rating does not apply. While keen not to disparage the VHI publicly, it isn't difficult to get a sense of annoyance from BUPA's spokespersons about the way it has been portrayed by VHI's supporters here.
The BUPA spokesman in Britain told Family Money that the arrogant and buccaneer image that has been painted of them as a private company that only offers competitive rates to young and healthy customers "could not be further from the truth. We have not become the largest health insurer in Britain by driving away older customers or by not offering competitive rates across all categories," he said.
BUPA was founded in 1947, before the setting up of the national health service to assist people in meeting the cost of hospital stays and surgical procedures. With two million customers 45 per cent of total market share it insists that many of its clients of long standing are elderly people on ordinary incomes or pensions not unlike many older Irish people". A provident association, it does not have shareholders, nor does it pay dividends. Surpluses are re-invested in health care services.
It is the only British company that provides both health insurance and health services. It also owns and operates 29 hospitals in Britain, a number of hospitals in Spain and has a majority share in the Blackrock Clinic in Dublin.
Aside from hospital cover, it sells a wide range of products and services from screening and health and fitness centres, health awareness programmes in the workplace (60 per cent of its customers are covered through workplace schemes), cover for foreign holidays and business and a dental insurance plan.
Health insurance plans vary according to customer, the type and extent of cover required and the level of premium paid.
Basic health insurance plans include cover for acute surgery, outpatient benefits and critical care episodes which include long term care, but not accident or emergency care since these are available under the National Health Service.
BUPA cover provides access to 800 hospitals, said the spokesman. Comprehensive cover on scale "C" BUPA's top category product, for a couple in their mid 30s with two or three children is approximately £70 a month, said the spokesman.
Two years ago it extended its services to include optional disability income benefit, critical illness cover and a hospital cash plan.
More recently it introduced, BUPA Health Fund which allows an 8 per cent premium refund that can be credited many of the above services including health club membership, in exchange for accepting a reduced number of hospital treatment centres. That is, instead of being able to choose to attend any of 800 hospitals under the standard BUPA Care plan, the customer taking up the BUPA Health Fund can attend only 150 listed hospitals.
All of this information about BUPA's British operation is largely irrelevant given the community rating system under which BUPA will have to operate here in Ireland. But in order to compete against VHI, it will have to come up with either a product that effectively mirrors the cover that VHI gives, one that concentrates on its more ancillary activities like the health and fitness centres and insurance products, or perhaps a combination of both.
Despite its political stamp of approval, community rating is not universally popular in Ireland. Younger, healthier subscribers are increasingly questioning the sense of continuing to pay higher VHI rates for diminishing cover and services when no credit whatsoever is given for either their youth, good health or claim free record. The challenge for BUPA will be to see if it can accommodate such a group within the confining ambits of community rating.
