The White Paper proposals on health insurance operate in favour of the dominant player, the VHI. They require BUPA Ireland to pay an estimated £20 million over the next three years to the VHI. They also require taxpayers to pay £50 million of a subsidy to the VHI. They serve to protect the State monopoly from competition and perpetuate inefficiency by hindering progress, innovation and competition.

Consumers should be the winners in a competitive health insurance market. They have enjoyed the value of meaningful competition across many sectors, notably the aviation sector, in mobile phones and most recently in the mortgage market.

An independent survey produced within the last year has shown that consumers do not believe they have meaningful competition in health insurance. They feel they don't have enough insurers or a sufficient range of products to choose from.

In an analysis carried out by Indecon International Economic Consultants of the 15 countries in the European Union, Ireland was assessed as being the least competitive in health insurance.

Yet the competition which BUPA Ireland has brought to the market over the last three years has given benefit to the consumer, the State and to its competitor VHI. Who would have thought that health insurance could be purchased for less than £3 per week net, which would give access to the Mater Private Hospital and the Blackrock Clinic for heart surgery?

We have also given consumers a new range of services such as cover for alternative medicine and health screening. They have choice, new benefits and better prices.

The competition which BUPA Ireland introduced has led to a huge surge in the number of people taking out private medical insurance, with more than 42 per cent of the population now covered. This degree of self-reliance, which we have strongly encouraged, has helped free up some of the public services for the less well-off in our community.

Since the arrival of BUPA Ireland and the implementation of "open enrolment", consumers of whatever age, sex or medical condition can move from VHI to BUPA Ireland without any change in their waiting-period conditions, any medical assessment, any exclusion of pre-existing illnesses, and all at the same community-rated premium.

Consumers can do this because "cherry-picking" is not allowed under the 1994 Health Insurance Act. In fact it is illegal. No one can be denied cover on the basis of age, sex or medical condition, nor can cover be terminated or cancelled for any of these reasons.

Insurers may not refuse to cover or renew customers and must charge them all the same subscription rate. These requirements are particularly onerous on a new entrant setting up in a competitive market where there is a State monopoly with a strong brand.

Many insurers would find the increased risk of taking on older people at the same rate as young people unduly onerous, particularly as the benefits of the contributions over many years would be staying with their competitor, the VHI.

BUPA Ireland, however, has from the outset supported the concept of a fair community-rated system in Ireland and embraced the concept of open enrolment as an enabler of real competition.

We accepted people of all ages and are the first insurer in the market place who had to take on people who are over 65, and we called for those who previously did not have any health insurance and were over 65 years of age to be allowed to participate in the health insurance market.

We welcome people of all ages from VHI without any penalties and we are in the business of looking after their claims, should they fall ill, without fuss or undue administration as befits a company dedicated to quality.

We do not agree that we should pay the VHI for claims of its members who have been with it for some 40 years, and who paid their premiums to the VHI over that period and continue to pay it their subscriptions.

This amounts to the VHI retaining subscriptions while its competitor contributes to its claims.

That is what the risk equalisation scheme does. It forces us, a new player, to compensate the VHI rather than making the VHI compete for customers in the marketplace with better products, benefits and prices.

All of the insurers surveyed by Indecon said the risk equalisation scheme was a barrier to entry into the market in Ireland. The impact of the proposed scheme would be to require BUPA Ireland with over 110,000 members and start-up losses to pay an estimated £20 million over the next three years to the VHI, which has 1.5 million members and profits this year in excess of over £11 million. This does not make any sense.

"Risk equalisation" is a mechanism which aims at giving insurers the same claims profile. The reasons put forward to support it are:

To bring market stability.

To prevent cherry-picking.

Competition has already brought market stability in terms of stronger reserves underpinning health insurance, a hugely increased take-up for private medical insurance, profitability for VHI and choice for consumer. A risk equalisation scheme could not bring these benefits.

Cherry-picking is not allowed and BUPA Ireland must and does accept adults of all ages, and medical conditions at the same price without any penalties. VHI has about 750,000 customers under 30 years of age and an unrivalled database. If it loses customers to us it is because we represent better value in the customers' eyes.

The contract is only for one year. VHI can revise its product offerings for the following year and win back lost customers. This is the essence of competition. Competition requires organisations to adapt and better represent customers' preferences. A risk equalisation scheme removes the competitive imperative.

The introduction of a risk equalisation scheme would prevent and distort competition, thereby depriving consumers of the benefits of competition. It would be unnecessary, unjustified and foolhardy to intervene in a market where even the limited competition allowed has brought so many benefits.

There are instances of risk equalisation schemes in Europe, but only in support of mandatory social insurance-based systems. This is not the case in Ireland, however, where we have a voluntary market where each insurer sets its own rates. In any event, BUPA Ireland's view is that the proposals are contrary to EU law.

BUPA Ireland will continue to pursue an open market which allows meaningful competition in health insurance. We are in the market for the long term and we want to compete fairly. Forcing us to support our competitor is not in the consumer interest and protects no one but the VHI itself.

Martin O'Rourke is managing director of BUPA Ireland