Mary Harney (Dublin Mid West, Progressive Democrats)

I want community rating and competition, above all else. My colleagues in Government and I will do whatever it takes to have both. I have been advised by legal personnel and others who are experts in this area that as long as there is a three year holiday, which does not exist in other countries which have risk equalisation, one will never be certain that a company will not exit after three years. A company could come in, grow a business, make some money and leave after three years when the holiday is over. For example in a situation where a company paid no tax for three years, why should it do something different in year four? I am strongly advised that if we want certainty and competition it is uncompetitive to have the three year holiday. When the legislation was introduced it was an 18-month period which was subsequently increased to three years. BUPA was in Ireland for ten years before risk equalisation applied.

On the question of my reason for taking this action tonight, I explained to the Deputies opposite that the Quinn Group cannot be authorised before 28 February 2007 when IFSRA will meet and the group must then be registered by the Health Insurance Authority. VIVAS has contacted the Department and informed it that if the Quinn Group is going to use this legal loophole then it certainly does not intend to start paying risk equalisation this year and it will use a similar vehicle. Unlike the Quinn Group, VIVAS did not have to go for authorisation as it is already authorised. If it were to go into business with a health insurer in Europe, for example, all it needed to do was walk into the HIA and re-register which it could have done up to 5.30 p.m. this evening. This is the reason it was not possible for me to talk to people before 5.30 p.m. The Cabinet approved this legislation this afternoon in an incorporeal meeting. A sub-committee of the Cabinet which included myself and the Taoiseach, the Minister for Finance, the Tánaiste and the Attorney General worked and prepared this legislation. This is the reason it had to be done this evening. It takes legal effect from midnight tonight so nobody can walk into the HIA tomorrow and use the existing loophole to avoid risk equalisation payments.

As I said to the Deputies opposite, I do not feel good about introducing emergency legislation and presenting people with a couple of hours to discuss it but I had no alternative. I had to act in the public interest in protecting community rating. If we did not do this, there is no doubt that community rating would have collapsed and nobody would be paying risk equalisation before the end of 2010. This would not be an acceptable position.

A number of actions need to be taken. The VHI does not have to meet the solvency requirements of its competitors and this is unsatisfactory. I have already received clearance from the Government to prepare legislation to put the VHI on a commercial footing. I have already given the VHI direction that it must act now in everything it does to prepare for meeting the solvency requirements which are very strict.

The solvency requirements require 40% of premium income to be put aside towards a solvency fund. The figure is 25% in other countries because health insurance, unlike other insurance, has more certainty. I would like to think that our regulatory body could examine the solvency issue because the VHI could be commercialised a lot quicker.

Other issues need to be considered. I have been advised in some reports that we should have lifetime community rating, which means that a person joining when they are 25 would earn a bonus as opposed to a person joining when they are 50. This would encourage young people to join and has been recommended in all the reports. The insurance companies active in the market would also support this initiative and I would like to see this introduced. I would welcome the issue of renewal notices a month in advance and providing information on the notice that a person may switch insurer without incurring a penalty because many people are not aware of this. I also refer to a number of initiatives relating to health insurance in general which I took in my last job.

It comes down to the fact that 52% of the population has health insurance because it is affordable. I recently spoke to an Irish couple in their 60s who had been in the UK for a number of years. Their health insurance in the UK cost £12,000 whereas it is €2,200 in Ireland. This is the reason that only 11% of the population in Britain can afford health insurance.

Health insurance is a good option. The measures being taken tonight will protect the 2 million citizens who have private health insurance by making insurance affordable, particularly when they are sicker and older. I do not agree with Deputy Gormley that we should go back to a monopoly provider. Monopolies in general are never innovative because they do not have to be and they do not give good value for money.

I want to see a competitive market——

See this speech in context