Government encourage and reward inefficiency - BUPA confirm they are pulling out

Heinrich

We all heard Bertie's "cop on" answer so the other guy said:

“Any criticisms of us are misdirected because we don’t cherry pick our customers. We don’t regard our members as cherries. People choose us,” said Mr O’Rourke.

Nice to see the competition off! Bloody foreigners, hah! Vote FF the ones who have cop on.

fulofh20

I have been with them for 5 years.
This is disasterous because I feel it is like having a no claims bonus destroyed. Does anybody know what happens to present holders of insurance?

mike65

The current contracts will be honoured and all claims will be settled. Nothing to worry about there anyway.

Mike.

Heinrich

mike65 wrote:

The current contracts will be honoured and all claims will be settled. Nothing to worry about there anyway.

Mike.

The lost job are to be worried about as well as increases due to the quasi-monopoly.

gandalf

"Bye Bye Bupa" thread merged into main thread.

gandalf

Apparently BUPA were going to originally announce that they were pulling out the day after the budget and the government grovelled with them to delay the announcement. Pretty grubby and pathetic from the soldiers of destiny, but they thats nothing new for this bunch !!!

Story linked here http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1742817&issue_id=15016

is_that_so

Having read some stuff over the weekend I am wondering about the whole pullout.

This piece from the Business Post.

Extract below

A Supreme Court appeal could take up to two years, during which time Bupa’s liabilities to the VHI would be increasing at a rate of about €1 million a week, the company said.

In the High Court judgment, which has been seen by The Sunday Business Post, Mr Justice McKechnie expressed surprise at Bupa’s decision to leave the market.

‘‘Given an average underwriting profit of more than 18 per cent per annum over the four years up to 2004, it is very difficult for me to understand, how purely in a business sense both the Irish and the group board could make such irreversible decisions, in the circumstances and at the time when they did,” said the judge.

‘‘These decisions are also rather surprising given the rather limited information which was placed before them.”

But the judgment is unambiguous in its findings against Bupa, at one point rejecting the explanations offered by the company’s managing director Martin O’Rourke.

O’Rourke said he had not seen the judgment. The judge found that Bupa had engaged in ‘‘if not technically price following...something very close to it.” ‘‘The scheme,” the judge found, ‘‘is absolutely necessary given our system. Moreover it is fair, reasonable and proportionate.”

In fact, the judge appeared to go further even than just the legal questions of the case.

‘‘A creation of a risk-equalisation scheme,” he said, ‘‘is in my view a pressing and substantial need in a free and democratic society.”

The judge analysed submissions on Bupa’s profitability. In response to VHI submissions that the British insurer was making ‘‘super profits’’ in Ireland, the judge said ‘‘being ’a super-profit’ or not, it is evidentially clear that the percentage earned by Bupa is substantially in excess of any other relative indicator in this business.”

Politically, the Taoiseach’s criticism of Bupa last Friday was in contrast to Minister for Health Mary Harney’s comments the same day. She said the government ‘‘couldn’t even contemplate’’ a situation in which there was no competition in the health insurance market.

With a report by the Competition Authority expected to recommend the break-up of the VHI, the future of the semi-state company could become a source of tension between the coalition partners.

Focus will now turn to Brussels, where the EU Commissioner for the internal market, Charlie McCreevy, has already written to Harney to express his concern about the effects on competition in the health insurance market.

McCreevy may chose to begin proceedings against the government, which could force the VHI to build up its cash reserves, raising prices, which will enable Bupa to raise prices and perhaps stay in the market.

The EU competition commissioner Neilie Kroes could also decide that the government’s risk-equalisation scheme constitutes illegal state aid.

And a piece from Garret Fitzgerald in yesterday's Times which I will summarise briefly. Anyone with online access may find it on their site( I don't)

He agrees with the government and says that they are right to stand up to BUPA. He maintains that BUPA were warned that after an "initial period of grace" community rating would apply. He goes on to state that he came out in support of community rating ten years ago. He also goes on to suggest that the entry of BUPA into the market here was a calculated gamble that they would not have to pay any risk equalisation or community rating. The main regret as he points out is the loss of 300 jobs.

I don't see him as anyone with an axe to grind and certainly a little more credible than the "cop on" quote.

redspider

The BUPA/VHI/Vivas 'private' health 'insurance' market is a small tip of the iceberg when it comes to problems with health services in Ireland and how they are paid for and funded.

First, all insurers are relying on the health services, both public and quasi-private. There is lack of services (and competition) in this space. It is a quasi-private system using public resources. It is common for Private Practioners (ie: service providers) that are being paid by the state, yet who use (abuse?) their public time/salary and who have access to public equipment and resources to deliver a "private service". The Public system then charges the private system, and systemic mistakes have been made and usually charges are well below cost. In this scenario, tax money is being used to subsidise private insured (VHI and BUPA). It is also very very badly adminsitered and the right hand doesnt know what the left hand is doing.

People paid for 'private health insurance' not so that they would get treated by a private health services, as this is not what is being provided by the health insurer, but in some cases giving the payer early and timely access to shared public health service resources. Its a way of jumping the queue!

There are many many inefficiencies in the public health system and the private system that has fed off it. The whole thing is a mess, and private insurance is but one part of it, as is community rating/risk equalisation.

Colm Rapple makes some good points and I agree with most of what he says:

http://dynamic.rte.ie/av/2202517.smil


redspider

shoegirl

My arguments to date have been largely based on Sean Barrett's article, which at least does go beyond the rather limited decisions based on the court rulings to date.

I think a large part of the problem is not just RE but the general place which voluntary health insurance is expected to play. For example, there is no onus on doctors, consultants or hospitals to work with all 3 insurers, so theoretically at least any one insurer can have a "mini-monopoly" with a particular hospital that would make it harder to compete. Likewise even after 10 years BUPA still doesn't have as wide cover amongst hospitals and consultants (I notice, being, from Dublin, but living in Cork for many years, that BUPA has much better coverage in the south - presumably from being based here - than in Dublin) which has put it at a competitive disadvantage.

But a lot of my opinion is deduced from the fact that my parents, who can barely afford health insurance at all, as they are living on little over the minimum wage on a single income, would love to move to a cheaper insurer than VHI but cannot since many of their long established doctors only accept payments via VHI. Also they are confused by the literature and don't understand the claims procedure - for crying out loud, my mother still once a year trapses into town on the bus to Middle Abbey St with a large pile of receipts - I'm sure VHI are used to her by now! (I suspect she's not the only person who does this!)

If the entire system was simplified to make it easier for people to change provider (like the way the telecoms switching has become SO much simpler) then it would have been easier to allow REAL competition in the market. VHI as far as I know, still had about 74%+ of the market, their annual profit apparently is more than BUPAs entire turnover, so it really did question the need for risk equalisation at this point.

redspider

shoegirl wrote:

I think a large part of the problem is not just Risk Equalisation but the general place which voluntary health insurance is expected to play. For example, there is no onus on doctors, consultants or hospitals to work with all 3 insurers, so theoretically at least any one insurer can have a "mini-monopoly" with a particular hospital that would make it harder to compete. Likewise even after 10 years BUPA still doesn't have as wide cover amongst hospitals and consultants which has put it at a competitive disadvantage.

If the entire system was simplified to make it easier for people to change provider (like the way the telecoms switching has become SO much simpler) then it would have been easier to allow REAL competition in the market.

Yes, I agree with you. The negotiations where rates/costs are agreed between the 'insurers', who after all are just spreading the costs of all their 'claimants', and the health service providers, is a murky one indeed.

There is no real competition in the health service area, so the 'fluff' at the top, ie: which 'insurer' is more efficient in terms of administrating 'insurance' compared to another is a moot aspect, and basically its not the area where real competition and service efficiency emanates from. The underlying services are where the costs are going, not to someone processing forms in Middle Abbey St or Fermoy, and as we all know, Health Costs in this country are a bottomless pit to some extent.

Of course health services are being provided and I dont want to label the health service as a complete fruit basket, whiuch it clearl isn't, but we must ask ourselves is it being run as best as possible for all concerned? And the answer is clearly NO. There are a lot of vested interests in keeping the current level of inefficiencies in the system and many (politicians, civil sevants, health workers) are avoiding the pain of doing what could be done. Its tghe patients who are poying for this, and in some cases with their lives, as in cases of MRSA and god knows how many other infections.

Thats a much more expensive price to pay than the difference between an inefficient VHI and a not that brilliant BUPA or Vivas.

And one final point. Couldnt all the BPO work of VHI, BUPA and Vivas be outsourced to India. Did we really need 300 people employed in Fermoy to do this administration? Wake up folks, smell the coffee, that is if your olefactory system doesnt need any medical attention!

Redspider

daveirl

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daveirl

daveirl wrote:

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With community rating, to avoid market failure, there eventually has to be some degree of risk equalisation. The two go hand in hand.

bk

redspider wrote:

And one final point. Couldnt all the BPO work of VHI, BUPA and Vivas be outsourced to India. Did we really need 300 people employed in Fermoy to do this administration? Wake up folks, smell the coffee, that is if your olefactory system doesnt need any medical attention!

I think not outsourcing to India was a good move (they could have also just used their existing facilities in the UK).

There is increasingly been a lot of backlash against outsourcing. Many banks in the UK, advertise as an advantage that their call centres are based in the UK. Dell had to move their business support from India back to US and Ireland after a massive backlash from their business customers and still haven't really recovered from it.

Would you really want to trust your health records to an outsourced company in India and try to deal with the communication difficulties when trying to get money back for medical treatment (already a very stressful thing)?

daveirl

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Juza1973

Now I feel more like in Italy. Another theft from the government "for your own good".

is_that_so

daveirl wrote:

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Many health problems can start in your 40s. Weight is a particular issue and can fluctuate a lot. And that draws in the associated difficulties e.g. diabetes, high cholesterol. blood pressure and potential heart problems.

Voipjunkie

daveirl wrote:

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As much as it sticks in my throat to say it

Mary Harney is right (yuck thats twice in as many weeks)

The average age of customers can hide an awful lot of finer detail
i remember a maths teacher used to always remind us of the room with ten guys
9 have 100 quid in their wallet 1 guy has a draft for 1 million quid they all on average have 109,000 quid but in reality the 9 still only have 100 quid.

The real figure to look at would be how many customers each has over 65

The other aspect I have not seen mentioned here is the high level of profit that BUPA ireland was returning 17% compared to 5 or 6% for BUPA in the UK
It seems that BUPA was able to over charge here and still look competitive because of the higher costs VHI had due to its older customer base.

daveirl

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