James Reilly (Dublin North, Fine Gael)

Yes, everybody needs to put his or her shoulder to the wheel and I am glad this will not affect grants and allowances for the retention of nurses and secretaries because that would be detrimental.

I refer to the problems faced by US and other multinationals. It is important for them to offer a quality health insurance benefit to remain competitive on benefits as well as to attract high calibre staff. In addition, small and medium-sized enterprises that also purchase health insurance for their employees will be faced with significantly increased charges to provide this benefit. The levy amounts to an increase of €12,800 for a company with 100 employees and this cost will clearly be considerably higher for larger companies. The levy will cost a medium-sized enterprise employing 50 staff an additional €6,400 annually at a time every company is seeking to cut costs and struggling to survive and we are trying to protect jobs. The Government's mantra is "Jobs, Jobs, Jobs", but its policies involve taxes on jobs and further costs for employers, which makes it difficult for them to retain jobs let alone create more.

The market competition implications of this move are significant. The levy is anti-competitive and it is a means to prop up the State dominant player. VHI remains super dominant in the health insurance market. The Minister stated the company's market share has reduced to 66%, down from 70% according to the most recent figures I have. The VHI's declared profits last year were €112 million without having received any risk equalisation funds. I have been accused of opposing risk equalisation. I have not opposed the concept but the timing and the quantum have always been of considerable concern, particularly at a time the VHI generates such large profits and holds such a dominant position in the market. There are questions about why it was necessary to introduce this levy and with such speed when there was no instability in the market. It was anticipatory.

Community rating, which all parties fully support and which has been prescribed in legislation, prevents companies from charging a higher premia to older members. If market segmentation was viewed as a danger in the market, it could have been prevented through the amendment of the supervisory powers of the regulator and increasing the levels of minimum benefit required in regulation. This is what happens in Holland. The regulator regulates and monitors the market. He or she is directly responsible to the Minister and the parliament.

I am also bothered that the levy is not ring-fenced and, therefore, the VHI can use the proceeds for any purpose it chooses, particularly in expanding business. We must remember that the VHI remains unregulated and does not require funding to reach solvency. It is said to be seeking to expand its commercial mandate into other business lines and jurisdictions, and needs funding to accomplish this. The VHI will receive in excess of €30 million from the levy in year one, yet it can use that money to compete in primary care in its joint activities with the SwiftCare clinics. In addition, it can use the money to buy private hospitals and enter the life insurance and pension markets.

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