The Government have announced plans to sell off the Irish Health Insurance company VHI.
It always seemed strange that the goverment was responsible for providing “free” public healthcare and also running a private health insurance company as well as regulating the health insurance market.
VHI – which is Ireland’s biggest health insurer in terms of people insured. will be privatised and probably broken up in the process.
VHI insures a bigger proportion of older people than Quinn Healthcare or Aviva. Older people tend to get sick more often than younger people – so VHI are less profitable as a result.
The Government want to introduce risk equalisation – which will mean that companies with larger numbers of older subscribers would receive financial payments, via the regulator, from their rivals with a younger membership profile.
They tried to intoduce legislation previously – but the other insurance companies protested about having to hand over €20 – €30 million to the VHI .
BUPA challenged it in the Supreme Court and the government lost . BUPA have since pulled out of Ireland and Quinn Insurance took over their operations.
Mmany of the legal challenges to risk equalisation scheme centred on the argument that making commercial companies pay sums of money to a State-owned enterprise (VHI) represented a form of State aid.
So – one way around this is to privatise VHI. We wrote earlier this year about the problem of VHI Solvency – and avoidance of regulation which still have to be addressed.
Before selling off the VHI – the government will have to boost it’s reserves sheet by a “substantial” sum – probably in excess of €100 million.
Quinn Insurance has had well publicised solvency problems too – and is in administration – ( it will probably be sold too).
Aviva seems to be the only sound insurer in the health market in Ireland at the moment.