Rate my community

Dara Gantly wonders whether the planned privatisation of the Vhi is merely a policy ‘sticking-plaster’ on health insurance reform

You may be familiar with such ranking tools as ‘rate my teacher’ or ‘rate my hospital’, but what you won’t find is a tool to rate your community. Yet, the Government’s actions of late could indicate what score it might dole out.
The Taoiseach is right to want a society bound together by solidarity, and that this principle should apply in all walks of public life, including the health service. But ensuring that the cost of private health insurance for older and sicker people is effectively supported by younger and healthier individuals – the principle of community rating – will not prove an easy task. And is it the one on which we should be concentrating?
The appointment of financial advisors to co-ordinate the sale of Vhi Healthcare is a welcome and well-overdue move, and should finally allow the company to meet the necessary solvency requirements of various EU regulations. Minister Mary Harney had wanted Vhi to become a conventional insurer authorised by the Financial Regulator by the end of 2008. Of course, at the time the original date was fixed, the Supreme Court had not yet ruled on the risk equalisation (RE) scheme.
Since then, the Minister has extended the date on five occasions. The latest deadline is 1 January, 2012, but last week’s events may alter this, as the State will now be making a substantial capital investment (some suggest more than €300 million) in order to achieve its authorisation ‘with urgency’.
It has been a bone of contention among Vhi’s competitors for some time that while they have to put aside 40 per cent of their premium income into a reserve fund, Vhi does not. This came into sharp focus during the recent Quinn insurance crisis, when that company was placed in administration to protect its policyholders due to concerns over its solvency.
The Government wants to develop a full, robust new RE scheme to start in 2013. It intends to continue the temporary interim tax relief/levy system for 2010/2011, and then implement new transitional arrangements from 2012 that closely approximate the effect of the full RE scheme. Significantly, it wants to bring primary care into the set of benefits that insurers in future must offer.
The Vhi has long held that risk equalisation is the essential mechanism that allows the Government’s social policy of community rating and the economic policy of competition to work together. The alternative would be ‘chaos’ or the abandonment of community rating in favour of risk rating, it believes. The Taoiseach and Minister Harney clearly share the same view.
But there are a lot of ‘ifs’ surrounding the Government’s plans; the two main ones being securing a buyer for Vhi (would BUPA fancy a return?) and, more problematic, devising a risk equalisation scheme that will not be overturned by the Courts, here or in Europe. But are we pushing in the right direction? Is all this merely a policy sticking-plaster before we adopt some form of universal health coverage?
Privatisation is not a ‘cure all’ for the problems facing the Vhi, and certainly will not solve the problems facing health insurance in this country. And what role – if any – will the new HSE CEO Cathal Magee play in all this, himself a member of the Board of Directors of Vhi?
The Government may believe it can secure community rating and risk equalisation by 2013, but the public may well get to play ‘rate my government’ before then.