The Government was last night rushing emergency legislation through the Oireachtas to close off a loophole under which the purchasers of health insurer Bupa Ireland would have avoided paying tens of millions of euro in risk equalisation payments.
The Quinn Group last month announced it was taking over Bupa Ireland in a €150 million deal.
This followed Bupa's decision to pull out of Ireland after losing a High Court challenge to the risk equalisation system. Bupa's 450,000 subscribers in Ireland were faced with having to switch to another health insurer, and 300 staff at Bupa's headquarters in Fermoy were threatened with redundancy.
A spokesman for the Quinn Group told The Irish Times last night that it would now review its options. The company said that it noted the announcement by the Government and had no further comment at this stage.
Risk equalisation involves health insurers with a higher proportion of high-risk subscribers receiving compensation payments from companies with a lower-risk subscriber base. As a result, Bupa would have had to pay millions of euro to VHI every year.
However, Quinn Group expected to be treated as a new entrant to the market, and to qualify for the three-year exemption from risk equalisation payments which up until now has been granted to new entrants.
Last night's legislation abolishes this three-year exemption for new entrants.
The Government announced after 6pm that it was rushing the Health Insurance (Amendment) Bill through the Dáil and Seanad.
It is understood that Minister for Health Mary Harney decided to introduce the emergency legislation after she received advice from senior counsel retained by the Government saying the Quinn Group had indeed found a loophole in legislation.
The Government was able to introduce legislation eliminating the loophole, as the Quinn Group has not yet applied for a licence to operate from the Health Insurance Authority.
Government sources said it waited until after close of business yesterday to announce its legislation so no company could register with the Health Insurance Authority before it became law.
A spokesman said it was anticipated that the new legislation, which was passed by the Dáil at 11pm and was sent directly to the Seanad, will be signed into law by President Mary McAleese today.
He said that once she signs the legislation sometime today, it is effective as of one minute past midnight last night.
The Bill was passed in the Dáil by 63 votes to 30. Fine Gael voted against it, and the Labour Party abstained.
In a statement last night, the Government said it was making its move "in order to protect community rating which keeps health insurance affordable for older and sicker people".
The emergency legislation was designed to "close off any potential abuse" of the three-year exemption from risk-equalisation payments, it added.
"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".
The statement signalled that the Minister for Health would bring proposals for further reform of the health insurance market to Cabinet in April, following receipt of a report from an expert group examining profitability in the sector.
The Opposition parties were briefed by officials from the Department of Health at 6.10pm in the Dáil yesterday.
They initially indicated support for the legislation, but later expressed serious concerns.