AS IS the way with White Papers, their inherent brevity can lead to confusion. Overall, what is being proposed seems to be relatively sensible, and any move to sort out this area of health service provision is to be welcomed. However, I have to confess I'm not entirely clear on what is being proposed.
The, initially, more controversial elements of the White Paper relate to the concept of "risk equalisation". Granted, the idea is not too complex - to set up a system that makes it worth while for health insurance companies to take on higher-risk clients.
In other words, to make sure that older people and those in higher-risk groups are able to get insured without having to pay ludicrous premiums. Very sensible. Nice aspiration. And absolutely essential if the VHI is to be sold off, which is clearly what this document is teeing up.
But how such a system would work is unclear. The White Paper does put forward an interim solution. For those of you who haven't had the pleasure of reading the document, this is how it explains it:
"This will be based on factors of age, gender and hospital utilisation (as a proxy for the resource intensity of claims). The utilisation measure to be adopted will be 50 per cent; based on an insurer's own hospital bed-night experience and 50 per cent; based on the market bed-night experience."
At least one person does seem to have decoded that statement. BUPA managing director Martin O'Rourke did some quick calculations and came up with a cost to his company of £20 million over three years. A figure which has yet to be disputed by anyone and indicates that BUPA will find itself in the bizarre situation of writing multimillion-pound cheques for its direct competitor.
The reason this seems bizarre is that our most recent high-profile encounter with competition has been the mobile phone market. One industry analyst went as far as to suggest that "the private health market here should be like what we see for mobile phones". But the situation here is very different.
Contrary to popular opinion, it is quite possible to survive without a mobile phone. They are a luxury item. Your health is not. And even in the mobile phone market precautions have been built into the contracts that have been handed out to reduce the "cherry-picking" that would give one competitor an unfair advantage over the others.
Private healthcare is a much bigger issue, however, than just insurance. And the White Paper does begin to address some of the other key issues. For example, it refers to the number of beds within public hospitals that are being used for private patients, the perception (some might call it a reality) that those with private health insurance can get treated faster than those on public waiting lists.
Its recommendations regarding the costs charged by public hospitals for private patients are to be applauded. It simply isn't right for public hospitals, in reality the taxpayer, to have to subsidise private patients' time in their beds.
Apart from the relative obscurity of a couple of sections of the paper, there are two probable outcomes of its implementation.
FIRST, because of the cheques BUPA will be firing in the direction of the VHI and the extra costs the public hospitals will be charging to both companies those of us able to afford private health insurance are likely to have to pay bigger premiums. Some of us are going to be unable to make those payments and are going to end up back in the public healthcare net.
The second relates to the likelihood that the VHI will be made fully private. Now, in theory, in a competitive marketplace the premiums should actually be going down because genuine competition will force the insurers to be more cost-effective, more efficient. But this is unlikely to happen.
BUPA has been involved in competitive marketplaces for quite some time now and is probably as close to maximum efficiency as it is going to get.
The VHI, by contrast, has had no competition to deal with and has still, it seems, passed on every increased overheads to the consumer through price increases.
Would a privatised VHI suddenly become fantastically efficient? I am none too convinced. The level of corporate culture change that would be required would be enormous, and with speculation that the Irish market could support four or five insurers, I suspect the company would struggle badly. Or get swallowed by a bigger fish. Either way, I can't see the VHI lasting too long.
From a strictly capitalist point of view this is precisely what should happen. But that would be to ignore the crucial role the VHI plays. As the Minister for Health stated at the launch of the White Paper, "Public funds go farther because those who have the means to do so largely fund their own care." And with the VHI tending to look after those people whose healthcare costs are highest, this is a major benefit to the Department of Health's budget.
Perhaps the Health Insurance Authority (HIA) would be able to solve this particular problem. This will be a totally independent regulatory authority and will remove from the Minister the conflict-of-interest allegation that has been thrown at him when he posits handing over £50 million to the VHI, which is still under his remit.
While, as I've pointed out, direct comparisons between the mobile phone market and the private health insurance market are flawed it should be noted that the advent of the Office of the Director of Telecommunications Regulation - the regulator responsible for mobile phones - has substantially aided the privatisation process there.