Given the sums involved, this case will inevitably end up in the Supreme Court, writes Martin Wall
The decision of the High Court to grant Bupa Ireland an interim injunction restraining the Minister for Health Mary Harney from implementing a controversial risk equalisation scheme in essence stops, for the moment, a process which could have seen the company paying up to €17 million to its main rival VHI next year.
The injunction was secured within a hour or so of Ms Harney formally accepting a recommendation of the regulator of the private health insurance sector that a risk equalisation scheme should be put in place from the beginning of January.
Risk equalisation is a form of compensation system within the health insurance industry under which companies with a large number of older subscribers (who claim more frequently) would receive payments from rivals with relatively younger membership.
Advisory groups have told the Government that risk equalisation is essential if the concept of community rating - where everyone pays the same level of subscription regardless of age - is to be maintained.
The scheme would have allowed the regulator, the Health Insurance Authority, to assess the difference in risk profiles between companies in the sector in the first six months of next year and calculate accordingly the payments which should be made between companies. For the first year a transitional arrangement would be in place under which risk equalisation payments to be made from one company to the other would be reduced by half.
Based on previous assessments of the market, Bupa Ireland would face paying around €33 million per year (around €16.5 million during the transitional period) to the VHI.
Bupa is already planning a full High Court challenge to the constitutionality of the risk equalisation scheme which is scheduled to be heard in February. The interim injunction granted yesterday means that Ms Harney cannot implement the risk equalisation scheme, as planned, pending the outcome of this case.
Last night Department of Health sources said the Attorney General was considering the issues involved. It is possible that the State may seek an emergency hearing of the High Court next week in an attempt to have the order granted yesterday overturned.
Bupa's High Court case will centre around its claims that the risk equalisation scheme is both unconstitutional and in breach of EU law.
Bupa will claim that risk equalisation payments are a form of taxation and that it was contrary to the Constitution for the Government to delegate such power, which should rest with the Oireachtas, to the Health Insurance Authority.
Separately, Bupa is also fighting a case against the EU Commission in relation to the health insurance framework.
For the country's two million private health insurance subscribers the events of yesterday will have no immediate effect.
However, in the longer term the result of the forthcoming High Court case could have a profound effect on the market here.
Bupa's current annual profits are around €17 million. The company has claimed that forcing it to make risk equalisation payments of €33 million would make its business unviable very quickly. Such a move would have serious consequences for its 300 staff and 600,000 subscribers.
However, on the other hand, VHI has claimed that the absence of risk equalisation payments has badly affected its finances. It has argued that with an ageing population, it could face a bleak future without receiving such transfers.
VHI and, indeed, the Health Insurance Authority have claimed that Bupa is currently making excessive or super-normal profits here in the absence of risk equalisation - a claim strongly denied by the company.
If the interim injunction stands, the introduction of risk equalisation payments will be delayed for some time.
While the High Court case is due to be heard in February, it is almost inevitable, given the sums involved, that this case will end up in the Supreme Court. Either way, it is likely that the ultimate decision on the implementation of risk equalisation payments, and the consequences that flow from it, will be made in the courts rather than by politicians.