Mr. John O'Dwyer:

I joined the VHI a few months ago and I find it bizarre that if certain long-serving loyal customers leave us, we will make more money. I do not know any business which would gain if their longest serving loyal customers left. I find it a challenge. With universal health insurance, clearly there must be funds and there has to be a system.

Prior to joining the VHI, I was very lucky to work for the largest health insurer in Holland, Achmea. I worked for it in a few different countries. The Dutch model is one we could consider. I do not say it is perfect. There are three forms of funding as follows: taxpayers pay a percentage of their income into a fund; people who can afford it have mandatory private health insurance and they pay this into a fund; and where people cannot afford it - in Holland they give it free for children - this money is also put into a fund. This fund is then allocated on very strict criteria. The criteria include age and health status. I will give a real-life example from Holland. The allocation for a 30 year old healthy male was €400. However, the allocation for a 32 year old suffering from diabetes with some complications was €12,500. That gives a sense of the distortion of two young people in their 30s, one healthy and one not healthy. There is a multiple difference in the treatment costs for these people.

Clearly, there must be good competition and all incentives must be aligned. A core philosophy for universal health insurance is that nobody should be allowed to make money by cherry-picking or managing risk. People should be allowed to make money if they deliver better deals with hospitals and consultants. They should be allowed to make money if they look after the health care needs of their customers and they deliver excellent customer service for their members. Clearly health insurers need to be free to contract with public and private providers.

There are a number of critical enablers. While clearly for all major initiatives such as this many things are needed, information and technology systems will play a key part. We see a key role for VHI in this and the authorisation of VHI is crucial. VHI can play a key part in the successful implementation of universal health insurance. We have the experience. We have nearly 1.2 million customers with 57% of the market share while paying 80% of the claims in the market. Some years ago we took many initiatives to manage the health care of our members, including the screening of 30,000 of them, many of them for diabetes. We have also started home care to try to reduce the cost of having people in hospital care. This year alone we will save 12,000 bed days with this initiative. We believe VHI has the experience and wherewithal to help implement this universal health insurance.

All incentives for providers, insurers and policymakers must be aligned to ensure we have cover for all people and that we reward good health care outcomes. A good start has been made here. One of the key enablers of universal health insurance is a good risk equalisation system. A draft Bill has been published and we believe this is a key foundation for universal health insurance and it must ensure there is no incentive for risk selection in the market. The insurers should be primarily focused on driving down health care costs and delivering excellent customer services. We believe the VHI is very capable of supporting these objectives.

In recent years the VHI has had a very comprehensive cost containment programme. I am very pleased with what I have seen and there have been many improvements. We can all throw out percentages, but sometimes some figures are worth highlighting. A few years ago a cataract operation cost €1,600 and today it costs €1,000. Stents, which represent a key part of any procedure, used to cost approximately €1,100 and today cost €200. A few years an MRI scan was quite unique and cost €600 on average. Today it costs €180. I understand we are the cheapest in Europe, with the possible exception of Bulgaria.

The VHI is very supportive of the Government's objective of universal health insurance and we believe we are well positioned and capable of supporting its implementation.