We are " a small open economy on the peripheral of Europe" thats how some economists describe Ireland and they are not wrong. Competition has an important place in this economy and being a "small open" economy, competition is seen as being an important factor in maintaining our competitive advantage on the Global Economic stage.

Why then have the Government decided to allow the elimination of competition in the Health Insurance Market?.Yesterday BUPA announced that it will be pulling out of the Irish Market due to a ruling in the courts that it will need to transfer nearly all its profits to its main competitor VHI (which is a Government owned company), a wonderful way to attract new companiesand increase competition into the Irish Market. The details of this decision will bore you so I will not go into the detail here, but there are some questions that as consumers and citizens of this country need to be pondered.

By eliminating one company from the market place the Government is essentially handing over today control to one company, thus creating a monopoly. The only winner in any monopolistic market is the company who owns the monoply they can charge what they like and we as consumers have no choice in the matter. You are essentially told that if you do not pay what we say,go without.This is one of the arguments that the Government put foward to reject the offer that  Ryanair made for control of Aer Lingus, can I hear the whispers of double standard?.

Pages and pages of newsprint have been allocated to the theme of "rip of republic" and we as consumers have been told by the Government to "shop around" for value when we are spending our money, to assist you the Government eliminates competition in one area of the market that most people would view as being an essential as opposed to a luxury.

An additional point to consider is the cost to business. Many large employers in Ireland pay private medical insurance for its employees and their families as part of pay. This ensures that the company attracts and retains key people. If business now essentially only has one company to choose from how will this effect that companies cost base? for example a large company of say 3000 full time employees may cost a company somewhere around €3,600,000 to provide medical insurance for the year a 5% increase would increase this bill by €180,000 pa, with the average industrial wage at approx €30k per year this equates to 6 jobs. I have a feeling that business will not accept this and if they were either expanding or indeed setting up I feel that countries with a lower cost base will be chosen before Ireland, so well done again Government.

What about the human cost of this decision? There are almost 300 people working for BUPA in its call center in Fermoy Co Cork,not to mention the other employees scattered around the Country, the Christmas present from the Govenment to these people is an uncertain future and a loss of spend to the local economy.It is estimated that BUPA contributes over €15million to the local economy,and with the Government taking VAT on goods and services and payroll taxes how much will the true cost of this decision be to all of us?

What will the European Commission make of this decision? Charlie Mc Creevy will not be happy with this, and knowing our luck we will probably be fined for breach of competition rules again adding more expense to you and me as taxpayers.

Now that the Government has removed competition (they may argue that it was the courts and not them, they should be reminded that they own the VHI) in the health insurance market, what next, will they start telling successful businesses up and down the country to hand over profits to the business next door who is making a loss. Stalin would be proud of us.

Ah yes, the Irish version of competition unique and in-describable.

Add a comment

 | Link | back to top |

Private medical insurance is a very small employee benefit. I doubt it does actually attract key people. More likely it is the job and the company.

The cost to business is pretty small which is why companies add it to their package offerings. A 5% increase to this tiny part of a companies whole staff budget is hardly going to mean companies jump ship and base themselves overseas.

The cost of doing it, in layoffs, professional fees, set up costs in a new land etc. would surely outweigh the tiny saving gained on private medical insurance.

 

So your contention is that companies would not carry out a full and detailed review of all associated costs in operating in the Irish Market. Well here's one for you they do and most of them do it on a monthly basis, and believe it or not if companies are not making or are forecasted not to make the figures, the first thing they look at are staff costs and they then consider if they can do cheaper elsewhere and if not they lay people off. Fact.

No, the contention is that if there was a small variance on the overall staff budget companies wouldn't be looking to relocate overseas.

The cost of moving overseas would be more than the increase in health care premiums.

If companies are laying off staff because of a minor difference against budget on the salary line, god help us!

I was,am,dunno anymore a Bupa member now because they are on the way out I have to find an alternative provider, so between raring my children,working,I must find the time to ensure that I cover my family. Thanks Bertie I w'ont forget.

It looks like the EU Commission has begun to get its teeth into the VHI with a letter from it to the Government in relation to the fact that other Health Insurers must keep a reserve on its balance sheet equal to 40% of its Revenue. The VHI only keeps 23% at present. Mary Harney has told the VHI that it needs to equal this by 2012. So yet again one rule for the VHI and another rule for everyone else. Truly an "Irish Version of Competition"

Looks like Sean Quinn comes to the rescue. Lets hope that he can bring to this market what he has brought to the Car Insurance market, and the government w'ont place more anti competitive barriers in his way.