Risk Equalisation and Competition in the Irish Health Insurance Market
The analysis contained in the YHEC report indicates that the report did not consider adequately the role of competition in the market for health insurance. This is a major weakness and appears in part to be due to a late deletion of competition from the report's final research brief by the HIA.(p.90) The evidence on the average age of BUPA Ireland members, 38 years and VHI members, 44 years provides no basis for transfers from BUPA Ireland to VHI. In the case of females between 38 and 44 years health expenditures decline with extra years. The regressiveness of the transfers and cross subsidies in Irish health insurance under community rating is illustrated by the internal transfers from low cost profitable Plans A and B within VHI to high cost loss making Plans C, D and E. Under the proposed transfer of €34m a year from BUPA Ireland to VHI a low cost BUPA essential health insurance cover with a premium of €272.39 would be levied to cross subsidise VHI Plan E costing €1,316.33 per adult. The price of the most expensive subsidised product under the HIA proposal is 4.8 times the price of the product to be levied in order to finance the cross subsidisation. The average BUPA premium was €327 while the average VHI premium was €435. The price of the average product to be subsidised is therefore 33% greater than the price of the average product to be levied to finance the cross subsidisation. CSO data confirms that expenditure on health insurance rises over all ten income deciles. Incomes in the top decile are 10.1 times those in the bottom decile but health insurance expenditure is 22.9 times greater. Section C of this report deals with the HIA letter to BUPA Ireland requiring the equalisation payment of €34m annually from BUPA Ireland for transfer to VHI which had operating profits of €73.3m (before unexpired risk reserve) in their accounts to February 2004. The HIA presents no analysis of the rationale for the payment. It mistakenly asserts that consumers as a whole will be better off from levying one firm in order to cross-subsidise another. It asserts without evidence that the payments required are significant, rising, likely to rise further in the absence of risk equalisation and that in their absence the stability of the industry will be threatened. While there is recognition of possible withdrawal from BUPA Ireland of some younger members because of the price rise in order to finance payments to VHI there is no recognition in the letter of the benefits of competition to health insurance consumers. Section D examines the competition issues neglected by both YHEC and HIA and the benefits foregone by the anti-competitive levies imposed on BUPA. The Irish health service is characterised by high costs and rent-seeking by producers which are extreme by EU standards. The scope for immediate cost savings and further future leveraged savings in a high cost health service is therefore large but these benefits are foregone by regulators adopting the anticompetitive levies recommended by the regulator in this sector.
|Date of creation:||Aug 2005|
|Contact details of provider:|| Postal: Trinity College, Dublin 2|
Phone: (+ 353 1) 6081325
Web page: http://www.tcd.ie/Economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Graciela Kaminsky & Saul Lizondo & Carmen M. Reinhart, 1998.
"Leading Indicators of Currency Crises,"
IMF Staff Papers,
Palgrave Macmillan, vol. 45(1), pages 1-48, March.
- Graciela Laura Kaminsky, 1997. "Leading Indicators of Currency Crises," IMF Working Papers 97/79, International Monetary Fund.
- Reinhart, Carmen & Kaminsky, Graciela & Lizondo, Saul, 1998. "Leading Indicators of Currency Crises," MPRA Paper 6981, University Library of Munich, Germany.
- Kaminsky, Graciela & Lizondo, Saul & Reinhart, Carmen M., 1997. "Leading indicators of currency crises," Policy Research Working Paper Series 1852, The World Bank.
- Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
- Guillermo A. Calvo & Carmen M. Reinhart, 2000. "Fear of Floating," NBER Working Papers 7993, National Bureau of Economic Research, Inc.
- Reinhart, Carmen & Calvo, Guillermo, 2002. "Fear of floating," MPRA Paper 14000, University Library of Munich, Germany.
- Husain, Aasim M. & Mody, Ashoka & Rogoff, Kenneth S., 2005. "Exchange rate regime durability and performance in developing versus advanced economies," Journal of Monetary Economics, Elsevier, vol. 52(1), pages 35-64, January.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 1-48.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2002. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," NBER Working Papers 8963, National Bureau of Economic Research, Inc.
- Reinhart, Carmen & Rogoff, Kenneth, 2004. "The modern history of exchange rate arrangements: A reinterpretation," MPRA Paper 14070, University Library of Munich, Germany.
- Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
- Christopher M. Meissner, 2002. "A New World Order: Explaining the Emergence of the Classical Gold Standard," NBER Working Papers 9233, National Bureau of Economic Research, Inc.
- Klein, Michael W. & Marion, Nancy P., 1997. "Explaining the duration of exchange-rate pegs," Journal of Development Economics, Elsevier, vol. 54(2), pages 387-404, December.
- Michael W. Klein & Nancy P. Marion, 1994. "Explaining the Duration of Exchange-Rate Pegs," NBER Working Papers 4651, National Bureau of Economic Research, Inc.
- Francisco Perez-Bermejo & Simon Sosvilla-Rivero & Reyes Maroto-Illera, 2007. "An eclectic approach to currency crises: drawing lessons from the EMS experience," Applied Financial Economics, Taylor & Francis Journals, vol. 18(6), pages 503-519.
- Reyes Maroto Illera & Francisco Pérez Bermejo & Simón Sosvilla-Rivero, "undated". "An Eclectic Approach to Currency Crises: Drawing Lessons from the EMS Experience," Working Papers 2002-22, FEDEA.
- Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2005. "Classifying exchange rate regimes: Deeds vs. words," European Economic Review, Elsevier, vol. 49(6), pages 1603-1635, August.
- Paul Masson & Francisco J. Ruge-Murcia, 2005. "Explaining the Transition between Exchange Rate Regimes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(2), pages 261-278, 06.
- MASSON, Paul & RUGE-MURCIA, Francisco J., 2003. "Explaining the Transition Between Exchange Rate Regimes," Cahiers de recherche 15-2003, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- MASSON, Paul & RUGE-MURCIA, Francisco J., 2003. "Explaining the Transition Between Exchange Rate Regimes," Cahiers de recherche 2003-21, Universite de Montreal, Departement de sciences economiques.
- Tudela, Merxe, 2004. "Explaining currency crises: a duration model approach," Journal of International Money and Finance, Elsevier, vol. 23(5), pages 799-816, September.
- M M Tudela, 2001. "Explaining Currency Crises: A Duration Model Approach," CEP Discussion Papers dp0487, Centre for Economic Performance, LSE.
- Ahmet Asici & Charles Wyplosz, 2003. "The Art of Gracefully Exiting a Peg," The Economic and Social Review, Economic and Social Studies, vol. 34(3), pages 211-228.
- Asici, Ahmet & Wyplosz, Charles, 2003. "The Art of Gracefully Exiting a Peg," MPRA Paper 4432, University Library of Munich, Germany.
- S. Brock Blomberg & Jeffry Frieden & Ernesto Stein, 2005. "Sustaining fixed rates: The political economy of currency pegs in Latin America," Journal of Applied Economics, Universidad del CEMA, vol. 8, pages 203-225, November.
- repec:rus:hseeco:181565 is not listed on IDEAS
- Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
- Atish R. Ghosh & Anne-Marie Gulde & Holger C. Wolf, 2003. "Exchange Rate Regimes: Choices and Consequences," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262072408, July.
- Enrica Detragiache & Eisuke Okada & Ashoka Mody, 2005. "Exits from Heavily Managed Exchange Rate Regimes," IMF Working Papers 05/39, International Monetary Fund.
- Inci Ötker & Rupa Duttagupta, 2003. "Exits From Pegged Regimes; An Empirical Analysis," IMF Working Papers 03/147, International Monetary Fund. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:tcd:tcduee:200058. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Patricia Hughes)
If references are entirely missing, you can add them using this form.