Paul Bradford (Fine Gael)

I welcome the Minister of State to the House. Hundreds of thousands of people across the country are concerned by the Government's decision to introduce risk equalisation in the health insurance industry. I have addressed this topic in both Houses over the past five or six years. The prospect exists of risk equalisation being adjudicated on in various domestic courts and also the possible, or in my view inevitable, impact on competition being examined from an EU perspective. These prospects are beyond our remit in this House so I wish to focus on the political decision the Government has taken to introduce risk equalisation.

I was amazed at the Tánaiste's decision to introduce risk equalisation. It goes against every recorded political comment on competition and choice for the consumer. Risk equalisation is a bizarre concept that will shut down competition in the Irish health insurance industry and return us to the days of one company being available to the Irish consumer. Her decision is inexplicable.

Current circumstances are no different from those of last year, when the Minister for Health and Children refused to introduce risk equalisation. The Health Insurance Authority makes recommendations to Government but on previous occasions when the introduction of risk equalisation was recommended the Minister refused to do so. She did not feel the circumstances warranted the introduction then but the circumstances have not changed. The Competition Authority and the Health Insurance Authority, charged with the responsibility of examining competition in Irish health insurance, expressed the view that the current situation allows for competition. The Health Insurance Authority has stated that there is no short-term prospect of instability in the health insurance market. In this context I cannot understand why risk equalisation has been introduced.

In the Irish health insurance market, where the dominant player has a major share of the market, this new policy is bizarre. It is analogous to asking a small local shopkeeper to hand over half his profits to Tesco or another major supermarket chain. Introducing risk equalisation will reduce competition in the health insurance market and we will lose the second largest player in health insurance, BUPA Ireland, and its enterprise in Fermoy, which employs hundreds of people. This will be detrimental to choice and runs counter to the Government policy of being pro-consumer and pro-choice.

From where did the impetus come to make the decision to change to risk equalisation? The circumstances which exist in the current calendar year are no different to the circumstances which existed last year, and 12 months ago the Tánaiste refused the recommendation to introduce risk equalisation. She seems to have reversed that policy.

Transfer of funding from BUPA through risk equalisation would result in a large proportion of its surplus being put into the VHI reserve. What will that do to ensure the VHI becomes more competitive and efficient? If we want to promote the cause of the VHI, a long-established and valid health insurance company in this country with hundreds of thousands of customers, we should promote efficiency within it. If the VHI has inefficiencies or faces financial issues that are difficult to resolve, simply taking the profits of the smaller company to prop it up will not be of any great benefit to the Irish health insurance consumer in the long run.

As the Minister of State is aware, the Irish health insurance market is unique by European and world standards. One company is dominant. If we want to change that situation and ensure that people have a choice not simply between VHI and BUPA but between five or six different companies, we must ensure that competition is welcomed and nourished in the Irish market. The introduction at this stage of a risk equalisation policy and transferring the profits of the small company to the large company goes against all that is good for health insurance in the long term.

The Minister for Health and Children must reflect carefully. If the Minister were of a different Government or from a different political party perhaps there would be some explanation. However, I cannot understand how the Tánaiste made the decision. Whether we are for or against most of her policies, we must concede she has attempted throughout her political career and in all of her utterances, to be a champion of competition, choice, the free market and opening up the market. Risk equalisation goes against all of that.

Who put on the pressure? Was it the Taoiseach, or was it at union or partnership level? Whoever put on the pressure and made the Tánaiste concede to the introduction of risk equalisation is not doing the Irish health insurance market or consumer any favour in the long term. This type of formula has no place in a modern economy attempting to foster competition. Even at this late stage, and leaving aside the prospect of an adjudication by the courts and Europe on the question of competition, we should be able to show political leadership by reversing the risk equalisation decision.