I am not a supporter of Mary Harney's efforts to increase the private element of our health service. But I strongly support her firm stand in relation to community rating and risk equalisation for private health insurance.
For, although cross-subsidisation is generally, and often with good reason, frowned on by economists, nevertheless because of the crucial importance of inter-generational equity in relation to health costs, in this particular instance such a process seemed to me to be fully justified.
Indeed, I recall supporting that system vigorously in this column just 10 years ago and attacking an attempt by Bupa to evade the community rating provision of the 1994 Health Insurance Act by means of so-called "cash plans" involving much higher payments by older people. That ploy was blocked by the government of the day.
It was, however, clearly desirable that the VHI State monopoly be faced with competition - so long as that competition would be on a "level playing-field". That meant competition that would not penalise the VHI for having built up over many decades a clientele that covers the entire age range of Irish society, including, of course, many older people who in the nature of things make more demands on our health services.
VHI premiums had always ignored the age factor. From its foundation by the State 50 years ago the VHI charged the same amount to younger clients with less health problems as it did to older people who were liable to make greater claims on resources.
So, Bupa were formally on notice that, after an initial period of grace to enable them to get going, they would become liable for compensatory payments, designed to secure that they and the VHI would meet on equal terms. Bupa knew then, and have known ever since, that failure to make provision for such payments would entail heavy losses for their operation.
However, from the very start Bupa chose to ignore the terms on which they had secured access to the Irish health insurance market.
By charging premiums that seem to have no provision for the compensatory payments they would eventually be liable to pay, they made it clear that their entry into the Irish health insurance market was not based on a desire to compete on level terms, but in fact involved gambling on eventually forcing the State to abandon community rating, thus undermining their VHI rival.
Bupa is a major British institution with interests world-wide, and they seemed to believe that because of their size they could eventually force the sovereign Government of a much smaller state to toe the line on this issue.
So, by charging its younger clientele premiums that from the outset made no provision for the cost of community rating, Bupa built up a large potential loss - apparently of €161 million - on the blithe assumption that Irish resistance would eventually collapse in the face of a threat by such a global colossus to pull out from this market when the time eventually came to pay what they owed.
Happily, our Government has stood its ground. It has not been intimidated by Bupa's threat of closing down its Irish operation if the debt it had accumulated was not cancelled. And, equally, the Irish courts have not been intimidated either.
It has to be said that the transition from a State health insurance monopoly to a viable company holding its own in the face of competition was always bound to be a difficult one. For one thing, as a State monopoly the VHI was not required to build up the reserves that a competitive insurance company would require in order to ensure its long-term solvency.
That process takes time and is not expected to be completed until 2012, and there are grounds for criticism of the slowness with which successive governments have tacked the transition to a new competitive health insurance regime.
It may be the case that the pull-out by Bupa, which they are likely to present negatively to their shareholders to obscure the failure of their risky gamble, will make it more difficult to attract other competitors to our health insurance market. Concern about this possibility is probably what lies behind hints from Government sources that the VHI may now have to be split into two companies to secure the desired level of competition.
The victims of these events are of course the 300 workers in Fermoy, who cannot be expect to have realised what a shaky basis their employment rested upon. However, especially when the issue at stake is so fundamental to social justice, no government could allow itself to have its hand forced by a threat of several hundred job losses.
A question remains as to why such a high proportion of our population feels the need to take out health insurance.
It is quite reasonable that better-off people should use some of their resources to ensure that if they are hospitalised they may have greater privacy and comfort than the State can afford to provide in the context of hospital care.
However, issues of comfort and privacy do not account for the huge scale of Irish health insurance provision involving almost half of our entire population.
No, the growth of private health insurance coverage in our State reflects two disturbing developments here.
The first, and for most people probably the more powerful factor, has been the growing waiting lists for public hospital treatment as our public health system has been allowed to deteriorate.
This has driven people to pay for private health insurance. And, unhappily, the more people choose the private route, the less the pressure there is, and will in future be, to ensure adequate hospital provision for the other half of the community.
There is something of a vicious circle here, contributing to the growth of inequality in our society.
Another factor may be the little recognised fading away of the former arrangement under which, whatever its other disadvantages, the combination of public and private medicine within the same hospital location meant, in the past that, regardless of their means, public patients usually had access to the services of the same highly-qualified consultants as private patients.
However, I have the impression that the emergence within the past quarter of a century of a whole range of private hospitals has meant that many leading consultants are no longer as available to public patients as before, but are now available only to people with private health insurance.
This is one of a number of disadvantages of the growing split between private and public medicine.