Seán Connick (Wexford, Fianna Fail)

I thank Deputy Breen for raising this matter today as it provides an opportunity to outline to the House the responsibilities of the Minister for Health and Children, the current position of the private health insurance market and the Government's actions and plans for reform.

The Minister for Health and Children has responsibility for governance matters relating to the VHI, such as board appointments, the receipt of its annual report and accounts and other matters. VHI, while owned by the State, is a not-for-profit company operating in a competitive market. It would be inappropriate for any Minister to interfere in matters relating to prices set by any one company which is required to compete fairly within that market.

The VHI announced price changes in regard to a range of its plans on 6 January 2011, which will take effect on 1 February 2011. The increases will amount to 15% for more than half of its customers, with higher increases up to a maximum of 45% for those on other plans. While the Minister is conscious of the likely impact on customers in the current economic climate, a key principle of the market is the right of customers, guaranteed in law, to switch between or within insurers to get better value. This includes switching to a different plan with their own insurer or another insurer to get better cover or to reduce premium costs. This rule applies regardless of the age or health profile of any individual consumer.

Health insurance customers can switch easily, without having to serve additional waiting times and cannot be refused by another insurer. Provisions have been included in relevant health insurance legislation to ensure that switching is as easy and seamless as possible for customers.

The Health Insurance Authority, as the regulator of the private health insurance market, can offer independent advice to consumers in regard to their rights. The authority's website, www.hia.ie, contains a wealth of information for the benefit of consumers. It can be contacted by telephone at 1850 929 166.

It is important that the other insurers in the market, which have on many occasions indicated to the Minister their willingness to take on all customers, now take the initiative and offer plans to older persons that will attract them to move between insurers. In this way, the market could begin to move towards a more equal sharing of older customers between insurers and we could see competition driving efficiencies in services provided. This would also have the effect of reducing payments from the two smaller insurers to the VHI under the interim risk equalisation measures.

In May 2010, a comprehensive package of measures was announced by the Government to address a number of issues in the health insurance market. With regard to the VHI, advisers will be appointed next month to prepare for the capitalisation, authorisation and sale of the company. New minimum benefit regulations will be prepared on foot of the Health Insurance Authority's consultation on the matter, and other measures, such as the introduction of incentives for younger people to enter the market earlier, are also planned.

Following a Supreme Court ruling in July 2008 which struck down the 2003 risk equalisation scheme, the Government acted quickly to introduce an interim scheme of loss compensation. The scheme covers the period 2009 to early 2012, by means of a temporary scheme of age-related tax credits and community rating levy. The scheme is designed to be Exchequer-neutral over the course of the three-year period and ensures that a very significant degree of support for the cost of health insurance claims is provided. This scheme has been approved by the European Commission and is in place since 1 January 2009. Preparations are ongoing for a permanent, robust risk equalisation scheme which will come into effect at the start of 2013.

The Government is fully committed to continuing the community-rated health insurance market and it is the Minister's firm conviction that the preparations currently in train will act to preserve that principle.

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