Madam, - It is unfortunate that Eddie Shaw (January 20th) did not take the trouble to read the many expert independent reports on community-rated health insurance, all of which conclude that risk equalisation is an essential support for community rating.
He addresses specifically the finances of VHI Healthcare. In the absence of risk equalisation VHI Healthcare had to finance community rating on its own. It could only do this by passing the cost on to members or by using its own reserves. Either way VHI Healthcare could not remain viable in the longer term.
On the basis that the members of VHI Healthcare were entitled to enjoy a community-rated price in a community-rated market, the only real option open to VHI Healthcare was to finance community rating out of reserves. We put no specific time frame on how long this could continue.
It would be a matter of judgment as to how long the financial reserves could last. Clearly, trading would have to cease prior to their elimination. Already the auditors were warning of significant deficits if risk equalisation were not introduced. The activation of risk equalisation will serve to spread health risks equitably and fairly across the insured community.
The Tánaiste has already announced that VHI Healthcare will be regulated by the Financial Regulator and be subject to normal solvency requirements. We fully support this decision. - Yours, etc,
BRIGHID SMYTH, Head of Corporate Communications, VHI Healthcare, Dublin 1.