This is a thoroughly disingenuous argument. It's practically Orwellian:
"no evidence has been produced to suggest that BUPA or VIVAS are "cherry-picking" their customers, that they are turning anyone away, or that they are treating some people differently to others.".
That is not the issue. The problem is, as even a neophyte economist should know, that older customers are less price sensitive and inclined to change. So BUPA and VIVAS price shadow VHI's premiums. As long as they keep their prices a little lower, they attract the younger, healthier customers.
VHI's customer profile suffers as a result and its clients represent a proportionately greater burden on premium payers as a whole, so they have to put up their prices. BUPA and VIVAS simply follow, but are still a little cheaper. Anyone with half a brain can see where this is heading. "Poof" VHI disappears in a puff of economic logic, and there's less competition in the market.
Competition in areas like this should be on quality and level of service and product. A free market will tend towards monopoly so you have to have balance. Not every area of social activity is amenable to regulation by market forces, for God's sake. You don't have to be a bloody communist to see that.
And to be under the impression that Lá Harney has a clue about how an economy works is naive in the extreme.
The voodoo economists have totally taken over the asylum. All this stuff was sorted out with Keynes. The sooner we get back to real politics and economics in this country - and everywhere else - the better it will be for all of us.
Nail on the head copernicus.
Hey Kev, thanks again for the link.
copernicus: in your imagined situation, what prevents another insurance company from entering the market and undercutting both BUPA and VIVAS? Oh yes, that would be your governmental regulations! Unless you can prove that health insurance really does tend towards a monopoly. The only monopoly I've seen is the one which the VHI operated for so many years.
wulfbeorn, old bean, I hope you'll concede the point when BUPA and VIVAS don't, in fact, pull out of the market.
We had the same nonsense from the motor insurers. Perhaps they weren't making a raw profit from insurance per se, but they were awash with cash, and it was that which made them so profitable.
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