Olivia Mitchell (Dublin South, Fine Gael)

I welcome the Bill, as far as it goes and as late as it is. There has been significant pressure from a variety of sources to bring the Bill to the House, as alluded to by the Minister of State. The greatest pressure came from the rightful contention of the nascent competitors in the market that VHI had an unfair advantage in not being required to hold the same level of reserves as was required of other insurance companies. Nor did it come within the ambit of the Financial Regulator. The Government was further pressurised to take action when the European Commission ruled that the derogation granted to VHI was no longer sustainable. There were also recommendations in the Barrington report and from the Health Insurance Authority and Competition Authority that the status quo was entirely unfair.

Whatever the provenance of the legislation, the fundamental issue it must address is that of competition in the health insurance market. That is the underlying objective of the legislation. The introduction of competition in public services is the key unresolved issue in our society. The absence of competition in this case, as in others, is resulting in poorer service, less choice and higher prices.

It seems, notwithstanding many amendments on Committee Stage in the Seanad, that the solvency issue is addressed in the Bill. I welcome the provision whereby it will come under the ambit of the Financial Regulator. However, we would be mistaken in expecting this Bill to create a level playing field in which there is a prospect of flourishing competition in the health insurance market. The legislation does not even begin to address the issue of the market dominance enjoyed by VHI. Almost 80% of the market belongs to VHI and for years it has been a protected and sheltered monopoly. The State, meanwhile, has been a supportive backer and an undemanding shareholder.

The elephant in the room in this debate is the introduction of risk equalisation, which is totally anti-competitive in the context of this background. It defies logic to suggest that it is somehow in the public interest to require new market entrants to pay huge sums of money to a monopolistic incumbent of some 50 years standing. I fully support community rating as the only fair pricing system for health insurance. Furthermore, I support risk equalisation where it is warranted. However, for as long as VHI holds a position of dominance in the market, which affords it such a huge advantage, there should be no question of other insurers being asked to subsidise it.

I have concerns too about additional powers being given to VHI against this background of dominance. For example, the power to expand its financial services is something with which, in normal circumstances, I would have no difficulty. This would be good if we could ensure it was competing fairly with others in the same market. If we are in a position where risk equalisation could lead — as it very nearly did — to all competitors being driven out of the field, I have a problem with additional powers being given to VHI. In these circumstances, the additional freedom to trade in insurance and introduce other financial services, set up subsidiaries, raise capital and become a private health provider as well as insurer is not the kind of power we should be giving to a monopoly, whether in the public or private sector.

I am concerned about the significant latitude being given to expand into the service provision area. In effect, VHI may now become a major health-care provider, as well as being a major health-care insurer. That could be a benefit but we should be very careful about introducing such a possibility when VHI could retain a monopoly. The Competition Authority must be very wary and careful about this in being a watchdog on our behalf. There should be no question of tying insurance customers to the service provision offered by VHI if it, for example, provided hospital care, which may be in mind down the road.

We must examine the relationship between the insurance and service provision businesses to ensure there is no cross-subsidisation that would militate against competitors in either market. It may be that this could be a benefit in leading to a reduction in prices because of vertical integration between the provider of insurance and the provider of a service but it is not a good idea when the provider has a monopoly. We should be very careful about this.

I am also concerned about removing current restrictions to safeguard the consumer, those buying insurance, particularly with regard to the Government's power to approve a price increase when VHI wished to do so. We all know cases when the insurer looked for a 15% rise and was granted 10%, or it sought 10% and was granted 5%. That at least gave some protection to the consumer but it has now been taken away and it is up to VHI to decide on prices. I am completely in favour of this in a competitive market, as one must have commercial freedom to set a price. If a monopolist or dominant player is controlling 80% of the market, it is not a good idea. We should be very careful about this.

Many other issues should be addressed in the Bill. For example, it has been heavily recommended that lifetime community rating be introduced. The Bill falls down completely on the really important decisions about the provision and direction of health care and the structure it will take. These decisions have not been made, yet we are giving free rein to a monopoly insurer for private health care. We do not know if there will be a future for private health care or private health care insurance, who will be insured or where insured patients will be treated.

We were told two or three years ago that there would be new consultant contracts for public-only care. We were also told that all private beds in public hospitals would go. We were then told that only some of the contracts would be public-only care and that we would have co-located hospitals. There is complete chaos and a lack of direction in these matters.

My colleague from the Labour Party, Deputy Jan O'Sullivan, and I attended a meeting in Buswell's Hotel today with various interest groups representing older people. They expressed grievous concerns about the introduction of yet another model of health care, with people paying within a completely different structure. There is no coherence, logic, direction or consistency in what is happening in the provision of health care.

Nobody knows how health care will be structured in the future and to give free rein to VHI, leaving the genie out of the bottle, is at this stage premature. Until major decisions about the structure of health care are made and clear direction is given to everybody trying to deliver the service, we will see the continuation of the chaos we have witnessed so far.

I do not wish to appear to be against VHI. I am probably one of its longest-serving members, although I am showing my age in saying this. I was a very small child when VHI was set up.

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