The Government has introduced emergency legislation to the Oireachtas to pass all stages tonight abolishing the 3 year exemption for new entrants to the health insurance market.
The Government decided to take the measure to prevent the new owners of BUPA Ireland, the Quinn Group, from taking advantage of the exemption which allows a three year holiday for new entrants into the market from making multi million euro risk equalisation payments to the State health insurance company VHI to compensate it for an older customer base.
The new legislation will have effect from the time it is signed by the President later tonight.
A technical measure is included to ensure that BUPA Ireland cannot shed their existing risk equalisation liabilities as they leave the market.
The Government said it has made the move, in order to protect community rating, which keeps health insurance affordable for older and sicker people, and to to close off any potential abuse of the exemption.
The Government said it takes the view that the abolition now of the exemption is the clearest anti-avoidance mechanism, without prejudicing any future policy reform in the area.
The Minister for Health Mary Harney is considering two reports on measures to enhance competition in the market from the Health Insurance Authority and the Competition Authority. She is waiting for the Barrington Market Review Group at the end of March and intends to bring her recommendations arising from all three to Government in April.
A spokesman for Quinn Direct is reported to have said : "We have noted the announcement and we are reviewing our options at this stage."
AIB Bank linked VIVAS said there are serious structural issues that need to be addressed in the health insurance market as identified in recent weeks by the Competition Authority and the HIA.
"We are calling now for the Government to address the issues of VHI dominance as identified in these recent reports with the same pace at which this legislation has been introduced," it said.
VIVAS Health said it remains committed to the Irish market but the proposal to introduce risk equalisation in its current form will not work and will further damage competition in the market.
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