The Government is to pass all stages of an emergency bill tonight aimed at abolishing the three year exemption on risk equalisation payments for new entrants to the health insurance market, it has been announced.
The emergency legislation will mean that anyone buying Bupa will be subjected to multi-million euro community rating payments to VHI with immediate effect.
The Government has taken the step in order to protect community rating by closing off "any potential abuse of the three-year exemption from risk equalisation payments".
The Bill will abolish with immediate effect the three-year exemption from making risk equalisation payments, which is available to new entrants to the health insurance market. Included in the bill is a further technical measure designed to ensure that Bupa cannot shed their existing risk equalisation liabilities as they leave the market.
"The Government 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," a statement said.
At the end of January insurance magnate Seán Quinn took over Bupa's business in a deal estimated to to be worth in excess of €100 million.
The Quinn Group claimed when the transaction was announced that it was entitled "as a new health insurer" to the three-year exemption from risk equalisation payments.
At the time Quinn Group chief executive Liam McCaffrey said he had "absolute" confidence that its claim for an exemption would withstand any court challenge. "It's a matter of fact and it's a matter of law."
In a statement, health insurer Vivas health said "serious structural issues" needed to be addressed in the Irish health insurance market.
"The speed with which the Government has introduced this emergency legislation shows that where there is a will there is an ability to move forward swiftly with the implementation of legislation and policy," the statement said.
"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".
The statement said the firm remained committed to the Irish health insurance market "and to operating according to the structures that are in place".
"Having said that, the proposal to introduce risk equalisation in its current form will not work and will further damage competition in the market.
"With Bupa gone and the intentions of the Quinn Group unclear Vivas Health is now the only alternative for consumers who do not want to support the former monopolist."
Fine Gael Health Spokesperson, Dr Liam Twomey, said the decision to rush through legislation raises many questions and fresh fears for BUPA subscribers.
"It is well-known that rushed legislation makes bad law and this is a poor response to an issue of great public concern," Dr Twomey said.
"I recognise that the risk equalisation loophole which emerged after the Quinn Group announced their intention to acquire BUPA's business had tobe closed off. However, [Mary Harney's] move tonight means that BUPA customers are once again in an uncertain position regarding their health insurance cover."
