COUGH UP, BUPA; Health insurer loses court fight over VHI payments.

Byline: By PAT FLANAGAN 

BUPA lost its landmark legal battle yesterday to avoid being forced to pay hundreds of millions to the VHI.

The decision could have serious implications for the Irish health insurance market as it will stifle competition and could result in higher premiums.

The health insurer claimed that it was unfair to make them hand over the cash because VHI has older customers and is uncompetitive under the controversial risk equalisation scheme.

The company had challenged the European Commission's approval of the Government scheme.

It requires health insurance companies like Quinn and Vivas to pay into a fund to support the state-owned VHI for having a large proportion of older and therefore more costly customers.

But the European Court of First Instance dismissed Bupa's case and ordered the company to pay the costs of the European Commission and VHI.

The court ruled that the scheme, introduced by the Irish Government in 2003, was "necessary and proportionate" in a system in which one operator - the Voluntary Health Insurance Board - is obliged to provide cover to all who seek it.

The ruling states: "Such a mechanism is a necessary and proportionate means of compensating the insurers required to cover, at the same price, all persons living in Ireland, independently of their state of health, age or sex".

Bupa had claimed in the Dublin High Court the scheme could cost the company about EUR160million over three years - nearly three times its estimated profit for the period.

Bupa appealed that decision and the Supreme Court has yet to rule on the matter.

Quinn-Healthcare, which bought Bupa's business, said after the ruling: "We believe there are still serious competition issues in the health insurance market as a result of the VHI's dominant position and the fact that it is not subject to normal insurance regulation requirements."

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