THE VHI has outlined the legal advice it received suggesting that BUPA's cash plans are in breach of the Health Insurance Act.
"The Health Insurance Act states that premiums payable under health insurance contracts shall not be varied by reference to age," according to a VHI statement.
It said the Act defined health insurance as a contract of insurance "the sole or principal purpose of which is to provide for the making of payments . . . for the reimbursement or discharge in whole or in part of fees or charges in respect of the provision of hospital in patient services.
It commented: "VHI is convinced that the principal purpose of the BUPA's cash plans is to provide reimbursement, or discharge in whole or in part, of leeks or charges, in respect of the provision of hospital or health services."
It quotes from the rules of the cash plans, which state that BUPA will pay set amounts by reference to the number of nights spent in hospital for in patient treatment, or days for day care treatment.
It points out that the amounts paid under the different cash plans correspond exactly to the different levels of charges of the various types of hospital, over and above benefits under BUPA's Essential Scheme.
"The fact that the benefits under the proposed cash plans correspond to the shortfall in payments payable under BUPA's Essential Scheme is clear evidence that BUPA's overall aim is to integrate this scheme with products which clearly contravene community rating," it said.
"BUPA's pricing strategy is to target younger people who are less likely to fall ill and to discourage older people from buying their cash plans.
It said the consequences of such actions, if permitted, will result in "older people being unable to aft ford private health insurance".