After the High Court rules against BUPA on Irish health insurance risk equalization - are expat covers legal?

If you are, or are considering, working or living as an expatriate in Ireland- you need to be aware of the current state of play on health insurance.

To be perfectly honest, there are now more questions than answers.

The Irish High Court has upheld the risk equalisation scheme in health insurance funding, which requires market leader, the State-owned VHI Healthcare to be subsidised by other insurance providers in respect of the higher age risk profile of the onetime monopoly provider. 

The ruling simply means that the private insurer BUPA will have to pay the State-owned VHI compensation because of its younger client base. BUPA’s Irish subsidiary, has previously said that it the High Court ruled against it, it would have to pull out of the Irish market. It said that the ruling could mean it would have to pay a massive €161m to the VHI over the next three years.

BUPA Ireland Managing Director Martin O'Rourke says that the consumer had lost out. "The elimination of meaningful competition is now avoidable only through Government intervention. BUPA has sought an immediate meeting with the Health Minister. Members' contracts are not affected."

VHI termed the ruling the as "a powerful endorsement of the need for risk equalisation to support community rating. This ensures that private health insurance is offered at the same price to the young and the old and therefore remains affordable to all who wish to avail of it." Curiously, VHI failed to mention the huge wodge of cash that would prop up their ailing finances.

VIVAS Health confirmed that it is 100% committed to the health insurance market in Ireland, despite the High Court ruling. Oliver Tattan, Chief Executive, VIVAS Health says: “The ruling will have detrimental repercussions for the health insurance sector in Ireland as it will lessen competition in the market, which is ultimately bad for consumers. BUPA has already stated that it intends to pull out of the market here if they are forced to pay risk equalisation subsidies to the VHI. It is now time for BUPA to come clean and to communicate its planned timeframe for exiting the market. Our message to our members hasn’t changed – VIVAS Health is here to stay and we remain 100% committed to our members and to the market. We will continue to offer the first class service and prices which our members have experienced since our launch.”

Oliver Tattan of VIVAS Health has also called on the European Commissioner for the Internal Market and Services, Charlie McCreevy, to urgently intervene to bring some balance to the Irish health insurance market. “It is clear that we need immediate action at EU level to end the current VHI protectionist regime which is damaging to consumers. The protectionist stance of the Irish government will further damage consumer interests and stifle competition in the marketplace. The VHI has been given a six-year window to become solvent, yet it will be creaming huge subsidies from its competitors. Risk equalisation is an unfair, disproportionate and anti-competitive intervention in the market. Clearly the government is protecting the VHI as no international insurance companies are prepared to invest in entering the Irish health insurance market. If the Irish market was attractive and fair competition could flourish, a number of the companies already operating in Ireland (such as AXA, AIG, Friends First, Allianz and Hibernian) would have entered the market.

"The range of unfair advantages which the VHI enjoys, including the risk equalisation subsidy, the ability to operate insolvently, exemption from consumer protection regulation and the ability of the VHI to cross-subsidise products in a way no other European insurance company can, are clearly very effective deterrents and are successfully keeping other investors out of the market. We need clear and detailed policy on competition in the Irish health insurance market that will serve as a framework for the future and as a guide to potential new market entrants and investors.”

There are only 3 health insurers in Ireland; VHI, VIVAS and BUPA. HAS has a licence but has been awaiting the court decision before activating it - and it is now highly unlikely that they or any other competitor will want to enter the country.

Some international/ expatriate insurers will not write cover for expats going to Ireland. The court decision could make other consider their position. We are not legal experts, but the ruling does leave a question. Some legal experts have suggested that if an international / expat policy is only for someone who is not Irish but is temporarily in Ireland then there are now doubts about legality. One argument is that if a UK expat has a permanent residence in Ireland then there may be a problem. Another argument is that if an expat policy covers several countries including Ireland, it is perfectly legal.

Frankly, we do not know the answer to questions raised on legality. All we can say is that if you are a UK expat who is or plans to go to Ireland, raise these questions with the insurer you are with, or the insurers you get quotes from – and get the answers in writing.