Business Irish

Saturday 17 February 2018

Sick state of health insurance

THE ruling by the EU Commission that the government must change, by the end of 2013, the status of the VHI -- at present as a statutory body it can't go bankrupt -- should serve as the signal for a major shake-up of the malfunctioning Irish health insurance market.

Eighteen years after the 1994 Health Insurance Act opened up the market to other players, it is clear that liberalisation hasn't worked. The VHI still has over 60 per cent of the market, while newer entrants have cherry-picked younger, more profitable customers -- the VHI has 20 times more over-70s on its books than its competitors.

With Fine Gael's plans to introduce universal health insurance by 2016 having apparently been put on ice and the VHI going bust a radical rethink is needed.

This will almost certainly involve breaking the VHI into three or four firms and allocating the VHI's older customers pro rata to the new "Baby VHIs" and the others. Without such changes, the cost of health insurance will be too high for most people.

Sunday Indo Business

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