Frances Fitzgerald (Fine Gael)

I thank the Minister for coming here this morning to introduce this Bill. The Minister has said that she will introduce several amendments to it.

As the Minister noted, it is extraordinary that the VHI finds itself in the anomalous position of being both the market leader in the health insurance market and an unauthorised insurer. Obviously the Bill seeks to address this issue. I note the Minister has stated she will table a number of other amendments. I welcome her intention to table on Committee Stage an amendment requiring the board to obtain authorisation by the end of 2008, as I would have questioned the Minister regarding the setting of such a date. As for section 3(2), the Minister stated she intends to table an amendment on Committee Stage in order that its provisions will take effect only after the VHI has obtained authorisation. Such an action is more protective of the State's interest. A number of other amendments have been also proposed.

Fine Gael values the VHI as well as the service it has provided and was set up to deliver. My party established the VHI on 1 October 1957. I appreciate this amending Bill has been introduced partially in response to the threat of legal action by the European Commissioner for Internal Market and Services, Mr. Charlie McCreevy. I have certain questions and issues in this regard on which the Minister should provide clarification. I note the Government has been keeping the EU informed of progress as it has taken a keen interest in the development of this Bill and has expressed concern regarding a range of issues that have arisen recently in the private insurance market.

It is important to note that many players in this field have become concerned regarding a lack of policy discussion on the future of the health insurance market. In a sense, over the years the VHI has operated both as an arm of public policy in respect of public health services and as a private insurer. The Minister will agree it has come from a somewhat unorthodox background. Nevertheless, it is held in extremely high regard. Clearly, the State has invested greatly in the company, both in terms of tax forgone by way of the tax reliefs for which all citizens who pay VHI subscriptions are grateful, and through a mechanism on which the Minister has spoken at length, namely, the subsidisation of private care in public hospitals.

While the Minister for Health and Children remains the biggest shareholder, important questions arise for citizens in any discussion regarding the VHI's future. In many ways, the citizens' primary relationship to the VHI has pertained to the cost of premiums, which for any family constitutes a major expense in the course of a year. What exactly are citizens buying? Most people believed that through membership of the VHI they were buying fast access to health care, as well as a choice of consultant. This has changed somewhat in the existing health services on foot of many changes in this sector, some of which were debated in the House last night. Obviously, it remains to be seen what will be the role of private medicine, the availability of consultants to perform private work and the location of such work, depending on the outcome of the negotiations regarding consultants' contracts.

However, in respect of citizens' perceptions of what they were buying in terms of access to health care and choice of consultant, the face of the health care service is changing. I refer to the increased investment in private facilities. Yesterday, Members discussed the regulation of such facilities and the need for action in that regard. Change has arisen on foot of enormous private investment, which raises a series of questions regarding the identity of those establishing such services, as well as standards of care. While many superb private facilities exist, areas of concern have been raised by some people who have had procedures performed in some — I emphasise some private facilities and who have ended up in the public health service requiring a considerable degree of care. While this issue is a debate for another day, it is important to note it as an area of concern. In addition, while such changes also provide opportunities for development within the health service, there are some question marks from the perspective of patient care which must be on the agenda.

I am aware the European Commission initiated the first stage of legal proceedings against the Government regarding exemptions to solvency requirements provided by the VHI. This action followed complaints lodged by the rival health insurance company, VIVAS Health. Ultimately, this amending Bill will provide retrospective cover to the VHI for actions in which it engaged that may have been outside its perceived function. These include the SwiftCare clinics and the provision of travel insurance, to name two examples. The explanatory and financial memorandum for the Bill states its object is to oblige the VHI's board to attain the level of reserves necessary to achieve authorisation as an insurer and to provide it with a structure that gives commercial freedom on pricing to the company. Evidently this is essential.

I have some questions the Minister should address in her response. I refer to the Bill's commercial freedom aspect, which she mentioned a number of times, and the removal of the Minister's role. From reading the Bill, I presume this will give more freedom to the VHI to involve itself in other activities outside of those it has traditionally provided. Does the Minister believe the VHI should engage in such activities? For example, the Bill allows for the VHI to establish a subsidiary company to provide pensions, which constitutes a major change to the VHI's role. What would be the State's liability in this regard? Would such companies be completely separate? For example, if such a company encountered difficulties in the provision of pension or financial services, would there be an ongoing liability for the State? Is such commercial freedom not somewhat undermined by the VHI's ongoing obligation to continue to do the Minister's bidding? The Minister should clarify this issue. It may be that such companies will be completely separate.

I seek clarity regarding the political and public accountability that will remain in place in respect of such companies. Could a Shannon Airport-like situation arise in respect of the VHI, whereby such companies would be fattened up under the VHI's auspices and subsequently privatised? Will they be set up as independent commercial bodies from henceforth? The Bill is unclear in this regard. Members are being asked to make a highly important decision regarding the VHI's future and answers to my questions would be helpful.

Some questions also arise regarding the Minister's plans for risk equalisation and she should outline them. My colleague, Senator Twomey, will make the other points Fine Gael Members wish to raise.