The faces of the Bupa executives said it all. Their glum expressions as they shook the hands of Bupa Ireland's new owners indicated that the sale of the business to Seán Quinn was never part of their plan. But what was their plan? Did they really think they could bluff the Government into abandoning one of the central tenets of its health policy? We may never know the answer and, as of yesterday, it is largely irrelevant.
The issue is what happens now. The health insurance market remains a mess. The dominant player, VHI, claims it cannot continue without transfer payments from its smaller rival. The new owners of the business of the smaller rival are claiming they do not have to make the payments, and Brussels is threatening to get involved.
That said, the Minister for Health's duty is clear. The health system is propped up by a large private health industry which in turn relies on widespread private health insurance. The only thing that makes this state of affairs either financially tolerable or morally justifiable for the public is the operation of community rating in the health insurance market, which ensures the sick and the old do not pay more than the young and the healthy.
The Minister really has only two credible courses of action open to her if she is to uphold this principle, as she must. The first option is to implement the spirit of the legislation and ensure that transfer payments are made by Bupa, or the company that, phoenix-like, looks set to rise from its ashes. But in doing so, she runs the risk of undermining the deal struck by Quinn and Bupa and thus finding herself with a market dominated by one large State-owned insurer. Failing to do it means higher premiums for VHI members who will in effect subsidise the Quinn operation.
The second option is to reform the market and find a way of maintaining community rating without financial transfers of the scale currently required. Moves in this direction are already afoot. Sitting on the Minister's desk is a report from the Competition Authority that is said to recommend the break-up of the VHI. A separate report will be with her shortly from a high-level group charged with assessing whether or not the market as currently structured is functioning.
Either or both of these reports could form the basis for reform that would allow the Quinn group to inherit Bupa's business, but not its risk equalisation obligations. It is unlikely to be good news for VHI, but as long as it does not result in higher premiums or jeopardise community rating that is no reason for not proceeding with reform. The goal is to preserve community rating, not VHI.