KEEPING COMPETITION FAIR FOR HEALTH-INSURANCE - HOW THE IRISH BEAT BACK RISK-RATED POLICIES

Objectives. This paper describes how Ireland created a level playing f ield for competition in health insurance, the strategies of a major in surer to introduce risk-rated policies that would segment the market, the successful campaign to block these policies, and the policy implic ations of the European Union requirement of competition in health insu rance. Methods. Policy documents, interviews, and press reports were a nalyzed. Results. The minister of health forced the commercial insurer to withdraw its policies and replace them with community-rated polici es. Conclusions. Because it is easier and more profitable for insurers to engage in risk selection than to become more efficient, beneficial competition in health insurance markets is extremely difficult to cre ate. Carefully drawn rules and monitoring are required to overcome inh erent causes of market failure. The current enthusiasm for saving mone y through competitive schemes in health insurance seems likely to prod uce higher costs and greater inequality.