Mr. Liam Downey:

I thank the committee members for their questions, and will start with Deputy Kelleher's. Universal health insurance is a matter of Government policy, details of which will be developed in due course, I am sure, and will be a matter of national debate and discussion. When the White Paper was originally issued, the VHI welcomed it and we look forward to engaging fully in the process and playing an appropriate part in the evolution of universal health insurance. Our position is that we are ready and willing to engage and participate when more information is available on the exact design of the universal health insurance scheme. We would expect to be consulted on it because we have a great deal of knowledge and background information that would be very helpful in that context. I am not sure there is much more I can say at this time, except that we stand ready, with our record, history and knowledge of the market, to assist and support. We hope we will have an important part to play in developing the universal health insurance plan, if it happens.

The incentive for young people is an interesting point. There is the risk that if people think something else is happening, they will delay and not bother with taking out health insurance in the meantime. However, people also realise that they have to live in the current situation and must have cover for themselves and their families if they can afford to do so. That is why affordability is such an important issue. I am sure there will be transitional arrangements for people who are already in health insurance to transition to any new plan, such as universal health insurance. That will come later. I do not see it as a big disincentive at the moment.

The big issue people have at present is the affordability question. They will have to pay for their health insurance, whether it is to a private company, or later as part of a universal health insurance scheme. It makes sense for them to be in a plan sooner rather than later and that is why we welcome the lifetime community rating initiative. The sooner people get into the plan, the better.

There were a couple of questions regarding the role of the Central Bank, the question of underwriting and who the ultimate underwriter will be.

Deputy Billy Kelleher raised the question of a delay. Last year we applied to be authorised and made a detailed submission to the Central Bank. There has been ongoing dialogue and discussion since on the application. It is constructive, and the Central Bank is still giving consideration to our application. We must remember, however, that it is an independent body and the final arbiter. The question of approval is a matter for it only; it is not something within our gift. We are engaging very closely with it and hope it will happen as early as possible.

With regard to capital and the business of underwriting, VHI previously indicated that the European view was that it was unfair competition if a government supported an individual player in the market. We have set about raising our own capital and having our own resources in place without Government support in order to satisfy Central Bank requirements. That is why we put in place the arrangement with Berkshire Hathaway and added to our reserves in the past two years through our good performance. It is in order to reach a capital figure which we hope will be acceptable to the Central Bank. It is in our hands and we have taken responsibility for it. We do not envisage receiving Government support as part of the application.

There was a question about the number of policies we had on offer in the insurance market. There are approximately 90 policies on offer from VHI and members or anyone else can apply for any of these. In the earlier days, when we did not have competition, there was a handful of four or five policies. As a result of competition, more policies have come into play that have been designed to meet the needs of particular segments of the market. I agree that in the ideal world it would be better if there were fewer policies and more clarity and in some respects it would be easier for people. On the other hand, they like choice and one of our competitors offers the opportunity for them to build their own policy. They can design any policy they wish. This is a product of competition and something driven by those targeting different parts of the market, developing products specific to particular segments of the market.

There was a question about capacity and private hospitals. From my experience, I know that demand can be induced by supply. As part of our drive to ensure we manage costs well, we must try to ensure we do not sanction more demand than is required in the market. When we are asked to sanction new hospital capacity, we put it through a very rigorous process whereby we satisfy ourselves that there is not already enough capacity to meet the need. In that way, we try to avoid the scenario where there is overcapacity in the market. It is a well known fact in health care that medical technology and supply drive costs upwards. It is certainly something of which we are very aware and there is a rigorous system in place to ensure we critically examine any request received in that regard. We will not approve additional capacity if it is not required or it will impact on the affordability question.