BUPA win Risk Equalisation Case.

mike65

from rte.

The Supreme Court has ruled that the Government's risk equalisation scheme for health insurance is based on a wrong interpretation of the law and should be set aside.

The court upheld BUPA's appeal against a High Court decision rejecting its challenge to the scheme.

Under the scheme, VHI was to have received payments of more than €40m from BUPA.

Those payments had been postponed pending the outcome of this appeal.

Bupa sold out to Quinn so I presume this carries forward.

Mike.

evil-monkey

damn straight!! risk equalisation was h*******t!!

godtabh

evil-monkey wrote: »

damn straight!! risk equalisation was h*******t!!

When you start paying more for health insurance as you get older remember your words here today.

evil-monkey

kearnsr wrote: »

When you start paying more for health insurance as you get older remember your words here today.

Just like I'm paying more car insurance now because I'm younger??

seamus

kearnsr wrote: »

When you start paying more for health insurance as you get older remember your words here today.

When VHI start cleaning up their act and stop acting like the civil service, you'll have a point.

The facts and figures came out which showed that VHI was not in a worse position than the other insurers vis-a-vis the age of their customers.

As it stands, people still won't have to pay more for their health insurance as they get older, but the VHI will have to start trimming away the fat because they're not being supported by their competitors.

With any luck the VHI will go to the wall, then someone like MOL will swoop in, demolish the union culture and turn it into a profit-making company.

evil-monkey

seamus wrote: »

With any luck the VHI will go to the wall, then someone like MOL will swoop in, demolish the union culture and turn it into a profit-making company.

Demolish the union culture?? We'd be so lucky...

seamus

evil-monkey wrote: »

Demolish the union culture?? We'd be so lucky...

It's actually quite easy. You take a week to secretly train a bunch of students to perform the phone monkey's jobs, and talk to an outsourcing company about temporarily outsourcing your core departments - Finance, IT and so forth.
Then when the union strikes, you bring the kids in to hold the fort until the union has no choice but to comply with you because they've no money. Fire anyone who refuses to comply.

The first two things you force the union to accept are that all new workers don't need to be part of the union, and that all workers have to comply with performance-related reviews and firing procedures.

Cabaal

seamus wrote: »

It's actually quite easy. You take a week to secretly train a bunch of students to perform the phone monkey's jobs, and talk to an outsourcing company about temporarily outsourcing your core departments - Finance, IT and so forth.
Then when the union strikes, you bring the kids in to hold the fort until the union has no choice but to comply with you because they've no money. Fire anyone who refuses to comply.

The first two things you force the union to accept are that all new workers don't need to be part of the union, and that all workers have to comply with performance-related reviews and firing procedures.

Haven';t McDonalds done this in the states to get rid of Unions...that ro close down stores and re-open a block away

evil-monkey

seamus wrote: »

It's actually quite easy. You take a week to secretly train a bunch of students to perform the phone monkey's jobs, and talk to an outsourcing company about temporarily outsourcing your core departments - Finance, IT and so forth.
Then when the union strikes, you bring the kids in to hold the fort until the union has no choice but to comply with you because they've no money. Fire anyone who refuses to comply.

The first two things you force the union to accept are that all new workers don't need to be part of the union, and that all workers have to comply with performance-related reviews and firing procedures.

and so rises a company where people have to actually work!! a little thing called efficiency finally blossoms, and the world becomes that bit of a better place...

(but I think we're getting off point here)

godtabh

evil-monkey wrote: »

Just like I'm paying more car insurance now because I'm younger??

seamus wrote: »

When VHI start cleaning up their act and stop acting like the civil service, you'll have a point.

The facts and figures came out which showed that VHI was not in a worse position than the other insurers vis-a-vis the age of their customers.

As it stands, people still won't have to pay more for their health insurance as they get older, but the VHI will have to start trimming away the fat because they're not being supported by their competitors.

With any luck the VHI will go to the wall, then someone like MOL will swoop in, demolish the union culture and turn it into a profit-making company.

I thought the whole point was that every one got to pay the same health insurance but if you get rid of risk equalisation the older will pay more?

Car insurance is different. Health costs the government so much. By encouraging people to get private health insurance it costs them so much less.

If BUPA's demographic had changed would there still be this issue? VHI might complain but that would be more to do with the fact that they aren't run efficiently.

I agree about the unions. It should happen every where in the public sector

seamus

kearnsr wrote: »

I thought the whole point was that every one got to pay the same health insurance but if you get rid of risk equalisation the older will pay more?

Well yes, that's the key point of it. The knock-on effect is that if one insurer has more proportionally more old people than its competitors, then it is theoretically making less money per customer than its competitors.
So someone came up with the moronic idea of forcing the competitors to hand over some of their profits to the hard-up insurer. That is, because obviously the hard-up insurer is incapable of winning younger clients itself.

VHI claimed they were one of these hard-up insurers and the High Court and the EU Court agreed. The Supreme Court seems to have disagreed.

The other insurers have never had a problem with the idea of risk equalisation, they've been fighting the ruling that they would have to pay their competitor for being painfully inefficient.

jor el

kearnsr wrote: »

I thought the whole point was that every one got to pay the same health insurance but if you get rid of risk equalisation the older will pay more?

That's community rating, which ensures that an 18 year old pays the exact same as an 80 year old, within the same insurer. Different insurers charge whatever they want, though all their customers pay the same amount.

Risk Equalisation was brought in to make the private insurers (with mainly young and healthy customers) pay VHI money, because VHI have a large number of older (and therefore more likely to be involved in health insurance claims) customers. What it never took into account is that the VHI has been taking money in premiums from a lot of these customers for decades, but it simply wasted this money.

It's high time this ridiculous rule was scrapped, and I say that as a VHI customer. VHI needs to clean up it's act, and cut it's costs. Being the most expensive insurer in the market is not the way to go about attracting new business either. No wonder so many are moving to Quinn and Vivas.

Colonel Sanders

kearnsr wrote: »

Health costs the government so much. By encouraging people to get private health insurance it costs them so much less.

Yet I'm taxed on the subsidy I get from my employer to pay for health insurance.

There was a bit of a discussion on thepropertypin (central bank forum) about how much of a joke this is, especially seeing as, for example, free car parking is not taxed as a BIK. We all know the answer why, the are afraid to tax god only knows how many civil servants with free parking

godtabh

Colonel Sanders wrote: »

Yet I'm taxed on the subsidy I get from my employer to pay for health insurance.

I didnt know that. I've only recently got VHI cover with work and assoumed it worked in the same way the pension contributions worked

chuckles30

If your employer is paying your vhi, it's taxed as BIK (benefit in kind). However, there is a corresponding tax credit available to you. So if you're paying BIK without getting a tax credit, get onto the tax office with the details of your annual vhi premium. They can back date it for 3 prior years if you haven't been claiming it up to now, but have been paying BIK.

muckety

Doesn't the VHI also run the ESB health insurance scheme? So are those of us paying for private health insurance paying for this too? I heard this recently but hope its not true!

chump

seamus wrote: »

Well yes, that's the key point of it. The knock-on effect is that if one insurer has more proportionally more old people than its competitors, then it is theoretically making less money per customer than its competitors.
So someone came up with the moronic idea of forcing the competitors to hand over some of their profits to the hard-up insurer. That is, because obviously the hard-up insurer is incapable of winning younger clients itself.

VHI claimed they were one of these hard-up insurers and the High Court and the EU Court agreed. The Supreme Court seems to have disagreed.

The other insurers have never had a problem with the idea of risk equalisation, they've been fighting the ruling that they would have to pay their competitor for being painfully inefficient.

What a ridiculous post seamus, very disappointed.

Ignore the calculations to determine how much a company should have to "hand over".

Ignore your belief in the inefficiencies in VHI.

Do you believe in the concept of risk equalisation for health insurers?

Because if you do, your comment highlighted in bold is a contradiction.

If you don't believe in risk equalisation, fair enough, I hope it doesn't bite you on the ass.
I believe in the concept of risk equalisation for health insurance and the result yesterday is outrageous IMO.

seamus

chump wrote: »

Do you believe in the concept of risk equalisation for health insurers?

No I don't, I thought that was clear.

If you don't believe in risk equalisation, fair enough, I hope it doesn't bite you on the ass.

How would it? Worse case scenario - VHI go under, their customers move to the other insurers, profits increase, prices drop, everyone's happy.

I believe in community rating, but forcing a company to subsidise its competitors undermines the whole idea of free market economics.

chump

seamus wrote: »

No I don't, I thought that was clear.
How would it? Worse case scenario - VHI go under, their customers move to the other insurers, profits increase, prices drop, everyone's happy.

I believe in community rating, but forcing a company to subsidise its competitors undermines the whole idea of free market economics.

Free market economics and health care don't have to be mutually inclusive.

Is community rating not in direct conflict with the principal of free market economics?


The way things stand a new insurer could enter the market, offer a product designed with an eye for young people, undercut VHI's prices and make hay.

What will that do to the market?

Is that fair on VHI?

Ultimately if everyone started at the same point, so all customers had to be 'won', what kind of products would the insurers offer, what kind of marketing would they use?
How could they go about making it more difficult for older people to sign up?

How can community rating work in Ireland, as is, without risk equalisation?

antoinolachtnai

Nothing is fair about the health insurance market. VHI has been trading for years whilst technically insolvent.

There has been plenty of propaganda about this from VHI, but the court ruling really has very little to do with the principle of community rating and a lot to do with following the letter of the law.

Zzippy

Colonel Sanders wrote: »

Yet I'm taxed on the subsidy I get from my employer to pay for health insurance.

There was a bit of a discussion on thepropertypin (central bank forum) about how much of a joke this is, especially seeing as, for example, free car parking is not taxed as a BIK. We all know the answer why, the are afraid to tax god only knows how many civil servants with free parking

There are probably a lot more people in the private sector with free parking. Also, public service workers pay their own health insurance, they don't get any employer contributions.
More of the old public-sector bashing... :rolleyes:

jimmycrackcorm

VHI should simply be allowed to significantly put up their prices but Quinn and Vivas should be prevented by the regulator from doing a percentage match. That way, the lazy VHI customers will eventually have to be forced to change to cheaper insurers and the world will be in balance once again.

seamus

chump wrote: »

Free market economics and health care don't have to be mutually inclusive.

Is community rating not in direct conflict with the principal of free market economics?

Not necessarily. Community rating only requires that a product costs the same regardless of the age of the buyer.

Outside of insurance products, that's how all other products are sold - so I don't see how it can be in conflict with the idea of a free market.

The way things stand a new insurer could enter the market, offer a product designed with an eye for young people, undercut VHI's prices and make hay.

What will that do to the market?

It will force the other insurers to compete, offer a similar product and try to prevent the other insurer from taking all the young people.

Is that fair on VHI?

Perfectly. The idea that VHI, shock, horror, should have to compete in the insurance market seems to be missing from some people. If they have to fire half their workforce and operate at a loss for two years to get to a competetive position, so be it.

chump

have to be quick with this reply

seamus wrote: »

Not necessarily. Community rating only requires that a product costs the same regardless of the age of the buyer.

Outside of insurance products, that's how all other products are sold - so I don't see how it can be in conflict with the idea of a free market.

I'd say the principal of community rating does interfere with the free market principal as in essence an insurer will have to sell their loss-making products (ill, old) in order to be allowed operated in the market. The market has been interfered with.

seamus wrote: »

It will force the other insurers to compete, offer a similar product and try to prevent the other insurer from taking all the young people.

So you're saying there will be a scramble to attract the young customers? Why aren't the other insurers competing now? I thought they were.

seamus wrote: »

Perfectly. The idea that VHI, shock, horror, should have to compete in the insurance market seems to be missing from some people.

How are they not competing? The already have a large customer base and are actively market their products?


Who are the people likely to change their insurance providers - the old and the sick or the young and restless?

You think it is fair if the incumbent insurer who naturally has a huge proportion of old and sick people insured should have to raise their rates for all members, thus reducing their competitiveness, to cover the costs for their higher proportion of loss making customers.
And at the same time the 'competitors' will encourage younger customers, and those more inclined to change insurers, by lower cost products and they will not have the associated higher cost base of loss making customers.

Aye that's competition and that's fair. (hint of sarcasm there)

seamus

chump wrote: »

I'd say the principal of community rating does interfere with the free market principal as in essence an insurer will have to sell their loss-making products (ill, old) in order to be allowed operated in the market. The market has been interfered with.

I'll concede that to a certain extent. I don't believe it interferes with the market as heavily as risk equalisation because RE removes the incentive to compete.

So you're saying there will be a scramble to attract the young customers? Why aren't the other insurers competing now? I thought they were.

I'm saying that if one insurer brought out a product that was likely to significantly affect the other insurers' customer base, then anyone with a two cells in their brain would release a comparable or better product. At the moment, the other insurers are competing, but VHI aren't. VHI know their products are inferior *and* more expensive but are relying on risk equalisation to make up their shortfalls.

You think it is fair if the incumbent insurer who naturally has a huge proportion of old and sick people insured should have to raise their rates for all members, thus reducing their competitiveness, to cover the costs for their higher proportion of loss making customers.

I'm still disputing that "higher proportion" that VHI claim to have. I'm searching for links at the moment, but I can remember the last time this debate came up, surveys showed that yes, VHI naturally had more older people overall, but proportionally the VHI had way more children and young adults on their books than the other insurers. And children and young adults are very cheap to insure.