The Competition Authority has warned that the introduction of risk equalisation, which compensates the VHI for its older customer base, will reduce competition and put up prices.
In its 200 page report on the private health insurance market, which was published today, the authority says risk equalisation 'is likely to strengthen VHI Healthcare's market power and allow it increase its price above competitive levels and sustain those prices for a significant length of time.'
In response the VHI said :'the major issue in Health Insurance remains the Government response to the threat of a 3.5 years exemption on the BUPA book of business following the Quinn Group acquisition. This would effectively mean the end of Community Rating in Irish Health Insurance.'
Community rating is when everyone pays the same for health insurance, regardless of their age.
Vhi Healthcare added that it is reviewing the report, and will make a full response in due course, but it was pleased to note that much of the advance speculation is not borne out by its recommendations.
VIVAS Health said it welcomed the report, but has called on the Competition Authority to take legal action against the VHI with regard to its 'anti-competitive practices'.
Oliver Tattan, CEO VIVAS Health said he wants the Competition Authority to mount a formal investigation into VHI behaviour with a view to taking legal action on the anti-competitive practices highlighted in the Report.
