NOT for the first time, a 16-letter term has added another furrow to the brow of the Minister for Health, Mary Harney.

Last week, five Supreme Court judges told Harney that she had gone beyond her powers in December 2005 when she gave the green light to risk equalisation -- a scheme which requires health insurers with younger customers to compensate those with older customers.

When Harney announced her plans to introduce risk equalisation from January 1 2006, Bupa -- which has since left the Irish market -- came out kicking and screaming. Just before Christmas 2005, Bupa went to the High Court to appeal Harney's decision. At the time, Bupa claimed it would have to pay €161m in risk equalisation payments, over three years, to VHI Healthcare -- which has an older customer base than others in the market -- even though Bupa's profits for the same period would come to only €64m. VHI disputed the €161m figure but either way, Bupa lost its High Court appeal in November 2006. Shortly after that, Bupa lived up to its threat to leave the Irish market. The saga continued in February 2007 when Quinn Healthcare took over Bupa. It appealed the High Court decision of November 2006 to the Supreme Court.

Bupa got what it wanted last Tuesday, when the Supreme Court ruled in its favour. The former chief executive of Bupa Ireland, Martin O'Rourke, said the judgement represented "a wonderful day for consumers". But is it? Or has the death bell of risk equalisation simply lined the pockets of greedy insurers?

Despite Harney's moves back in December 2005, no insurer has yet had to fork out for risk equalisation. Quinn and Hibernian -- which recently took over Vivas -- were due to pay VHI about €40m in risk equalisation payments. They have both saved on this bill. But have their customers?

"Quinn and Hibernian have said that they have built the cost of risk equalisation payments into their premiums," said Aongus Loughlin, head of healthcare with Watson Wyatt. "Does this mean that they will now reduce their premiums?"

When contacted by the Sunday Independent last week, Quinn and Hibernian refused to answer this question. Neither would the insurers say who exactly had covered the cost of the risk equalisation payments they had been expecting to pay.

VHI didn't mince its words however. "No payments have been made under the risk equalisation scheme," said a spokeswoman. "The absence of the scheme means that VHI customers alone have financed community rating [where everyone pays the same for similar insurance cover, regardless of their age] to date. The decision may have serious consequences for older and chronically ill members."

VHI is due to announce a price increase for its customers next month. Before the Supreme Court decision, chances were the price increase for VHI's Plan B -- one of its more popular plans -- would be between 7 and 9 per cent, according to industry sources. With the demise of risk equalisation, these customers could easily be swallowing a price increase in the mid-teens.

VHI said last week that it had not yet made a decision about its upcoming prices.

However, the insurer "will now have to have a serious look at the price increase planned [before the Supreme Court decision]", said Loughlin. "It's possible that Quinn and Hibernian will not have a price increase over the next year because of this decision. Prices should go down for those customers who are with Quinn and Vivas and prices will more likely go up for those with VHI."

Amid fears that the Supreme Court decision would price elderly people out of the private health insurance market, the general manager of Quinn Insurance, Colin Morgan, rushed out to say: "I would like to especially reassure all elderly members of the community that they will continue to have access to all of our plans at the same price."

Morgan however was fudging the question. Dentists charge more for a new set of dentures than they do for a routine check-up. The charge for the dentures will be the same for an elderly person as it is for a young 20-something. But who is more likely to need a new set of dentures? The answer is obvious.

Similarly, who is more likely to pay their insurer for cover in a private hospital for hi-tech procedures such as heart bypasses -- a carefree, healthy young person or a 60-year-old with heart problems? This answer too is obvious. Insurers will still charge their customers -- regardless of age -- the same price for individual products. But different products will be priced differently and some products are more likely to appeal to the elderly than the young.

The most expensive health insurance products are those that cover hi-tech treatment and a private room in a private hospital. It is these which appeal to the elderly and it is these which could see major price hikes on the back of the Supreme Court decision. For most of us, the time we will rely on our health insurer most is when we become old and are retired. Ironically, this is a time when we're unlikely to be working and less likely to afford expensive cover.

Harney has said it is her "primary objective" to ensure that health insurance be affordable for older and sicker people. New legislation for the health insurance system must now be drawn up and it will take months before we know if risk equalisation will be held onto in some form, or if a new system is introduced altogether.

Some believe that risk equalisation -- or the absence of it -- will have no bearing at all on the price that elderly people pay for health insurance. "Risk equalisation never helped the old and the vulnerable," said Ray Kinsella, a healthcare professor with University College Dublin. "The fact it's now gone means Ireland can develop its health insurance market more. The shadow of risk equalisation has prevented a proper health insurance market from developing. It has sapped the energy out of people who could have helped boost the health system. It has deterred companies from coming here to develop insurance products for long-term medical care. We need a good public health system and a competitive health insurance market."

Any insurers currently eyeing up the Irish private health insurance market will certainly be rubbing their hands with glee at the latest court decision. Without risk equalisation, they no longer face a multi-million euro bill after three years of operating in Ireland. About a year-and-a-half ago, Axa was in talks to take over Bupa. Could last Tuesday's decision make it more feasible for the insurer to enter the market?

"We would have an interest in the private health insurance market in Ireland if we could get the right scale," said a spokesman for AXA. "If the VHI were for sale, we'd be interested in taking it over."

AXA has however not made any approaches to the VHI nor has it any plans to do so.

When asked last week if it could pull out of the market because of the court decision, VHI's answer was a firm 'no'.

More competition in the private health insurance market could drive down prices. But what could Harney do to ensure older people don't pay more for health insurance? Could the answer be in mandatory health insurance?

"There is no point talking about protecting the elderly and the vulnerable if you have a two-tier health system," said Kinsella. "The only system that will work is a one-tier health system. Mandatory universal health insurance would be sustainable, it would ensure everyone would have equal access to healthcare."

Mandatory health insurance doesn't appear to be on the cards, though. "Ireland already funds health service provision for all residents equally through compulsory taxation," said a spokesman for the Department of Health. "To introduce a further compulsory source of funding for universal insurance would effectively be a substantial increase in taxation. There would be great complexities in any move from a taxation-funded health service to a compulsory insurance-funded health service."

The latest Supreme Court decision has thrown up more questions than it has answered. It could take months for a clear picture to emerge. Many sick people out there can't afford to wait.

- Louise McBride