BUPA has described comments by the Taoiseach about its withdrawal from the Irish market as 'misdirected'.
Bertie Ahern said community rating made health insurance affordable because without it many older people would not be able to afford cover.
Mr Ahern rejected BUPA's claims that only the VHI could make a profit in Ireland. BUPA's managing director in Ireland, Martin O'Rourke, said his company did not pick who could get cover. He said the market allowed people to choose their insurer, not the other way round.
A report from the Competition Authority - due next month - is expected to recommend a break-up of the VHI, which has around 1.5 million members.
The Minister for Health and Children, Mary Harney says she is awaiting the report, following yesterday's decision by BUPA Ireland to pull out of the market because of the risk equalisation system. This requires companies with a lower risk profile to compensate others with older, more expensive members.
Yesterday, BUPA Ireland announced it was pulling out of the Irish market, with immediate effect, and would end its cover for 475,000 members as their policies lapse.
The Minister for Health and Children, Mary Harney says she regrets the BUPA decision and is awaiting a report due next month from the Competition Authority on the health insurance market.
It is understood that the report will say that for real competition to work, there needs to be at least four main players in the health insurance market. Following BUPA's decision there will be just two.
The Competition Authority report will recommend that the VHI be broken up into a number of separate competing companies. This may necessitate the VHI brand name being dissolved so as not to give any new firms an advantage.
Earlier this month the High Court ruled that the risk equalisation scheme was legal, which means that irrespective of its decision yesterday to pull out of the market, BUPA Ireland still to pay the state an estimated €8-10m under the risk equalisation scheme from January of this year.
The Government has promised legislation to put the VHI on an independent, commercial footing which in time will require it to meet minimum solvency levels and to compete on the same footing as other insurers.
The Amicus trade union has said it will resist any attempts to break up the VHI. The union said its 800 members in the VHI had secure positions around the country which they intended to retain.
