the market while VHI charges less for Plan E, its top of the range policy. A core difference
between the two is in their attitudes to health. BUPA has a broader perspective, covering
preventative healthcare and alternative medicine which may be more attractive for younger
subscribers...... VHI, however, wins hands down for its support and information network
that spans the country and offers a wider range of consultants and hospitals." (Indecon, 80).
VIII CONCLUSION.
Ireland has an expensive healthcare system and its costs have increased by over 50 per
cent in the last three years. Its costs are disguised by the tax buoyancy of the exchequer
during the present period of unprecedented growth and the low dependency ratio of the
population in Ireland compared to other European countries. Productivity in the Irish system
appears low and the extent of fee per item payments has been a cause of concern elsewhere.
Price incentives favour hospital rather than primary healthcare. While 42 per cent of the
population have private healthcare insurance the sector bears only 8 per cent of the country's
health expenditures. The market in which the White Paper seeks to restrict competition is a
relatively small market in
hotel-type services and queue-jumping but in doing so the prospect of competition in the
provision of health services is precluded.
The weak form of competition proposed by the White Paper for health insurance
sector is unnecessarily harsh on new entrants. It protects the 93.6% dominance of VHI,
which heretofore has enjoyed a monopoly maintained by the sole shareholder, the Minister
for Health. The risk equalisation scheme should not have been added to the lifetime
enrolment, open membership and community rating requirements already in force. To require
the only new entrant, BUPA, to make compensation to an incumbent thirty times its size is a
huge barrier to competition. The normal market leader in health insurance markets has about
a third of the market. To permit only service competition is likely to increase costs compared
to a system of price and product competition. It is also inefficient that community rating is
protected even to the extent that discounts for non-smokers are not allowed.
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