The VHI has denied that yesterday's High Court's rejection of Bupa's challenge to the risk equalisation scheme will be bad for consumers.
Bupa had challenged the legality of the scheme, under which it will have to pay the state-sponsored VHI compensation because of its younger client base.
Bupa has argued that it would have to pay up to €161 million to VHI over a three-year period, while its estimated profit is just €64 million. The British-based company warned it may leave the Irish market if the scheme was enforced.
VHI chief executive Vincent Sheridan
In his ruling yesterday Mr Justice Liam McKechnie said the Government scheme was not perfect, but there was an overwhelming preponderance of evidence that the stability of the market could be threatened in the absence of the scheme.
Mr Justice McKechnie ruled Bupa entered the market with knowledge of the regulatory environment. Transfers from insurers with lower risk members to those with higher risk members, first appeared in legislation in 1994, he said. He also accused Bupa company of taking advantage of legislation in the early stages to make a profit.
He acknowledged there was an anti-competitive element to risk equalisation but said he scheme was legal under both Irish and European law.
VHI chief executive Vincent Sheridan today said today consumers would benefit from the scheme and its British rival would still turn a profit despite the levy.
"If Bupa left the market following the introduction of the risk equalisation scheme it would mean that the only reason that they were in the market at the first place was to take the exceptional gains associated with having a younger membership," he told RTÉ's Morning Ireland. "If the only reason for them to be in the market is to take the gains of a younger membership then the market is better off without them."
"[Risk equalisation] means you have a fairer scheme in Ireland because everyone who takes out health insurance is contributing to the community risk. Everybody that enjoys community rating has to contribute to the community risk and that's the fairest system," he said.
Mr Sheridan described the figure of €161 million as "totally off the wall", insisting it would be closer to half that figure.
Bupa managing director Martin O'Rourke described the ruling as "a very bad day for Irish consumers and a dark day for Bupa Ireland" and its customers. "The judge has acknowledged that we cannot operate under RES without incurring a loss. The elimination of meaningful competition is now avoidable only through Government intervention," he said.
Bupa representatives are to meet the Minister for Health Mary Harney next week to discuss the situation.
Vivas Health, which has around 100,000 members in groups schemes, said yesterday the ruling was bad for competition. Vivas will also have to make payments to VHI.