Mary Harney (Dublin Mid West, Progressive Democrats)

Sometimes, we let our perceptions and ideologies get in the way of facts. While I understand people supporting public medicine, some state that there is a special place in their hearts for an insurance company that happens to be owned by the State and the guarantees it provides to patients. If one has private health insurance, one has preferential access to diagnostics and facilities paid for the by the taxpayer and for which a group of employees in the system gets a fee.

I was asked about itemised bills and why, after moving from a private facility to a public hospital, someone's tests needed to be redone. I do not know the specifics of the case, but the doctor would not have got a fee for the tests carried out in the private facility. Patients are often put through a second set of tests because a fee will go to radiologists, pathologists and many others in the public hospital system if the patients have private health insurance.

Some of these matters are at the heart of what we are trying to do with the consultants' contracts. I want to ensure the resources put into public health facilities by the taxpayer are accessible to patients on the basis of medical need without preferential access for one group of citizens who pay private health insurance, sometimes with great difficulty.

The Bill's purpose is to put the VHI on a level playing field with its competitors. I have great respect for Senator Quinn and his enterprise and zeal. As he knows, I am a fan of one of his stores in Lucan where I shop. It is innovative. If he were made to do something differently than his competitors, he would not find it acceptable. VIVAS Health must put 50% of its premium income aside for reserves. Contrary to Senator Fitzgerald's statement, this is not a European requirement. As the Financial Regulator requires insurers who raise €100 million in premia to put €50 million into reserves, it is unfair to exempt the VHI. It is not acceptable that a group of investors in a market must play by a different set of rules than another group, particularly where the second player has approximately 75% of the market.

When the first life directive was implemented in 1972, the VHI and its counterparts in other European countries had a derogation. When the market was opened up in the late 1990s, the VHI continued with its derogation. This is not good enough. Irrespective of Europe's opinion of the derogation as a state aid, it is not fair to other competitors from our perspective.

I agree with Senator Twomey's point, but the high threshold is due to the Financial Regulator rather than Europe. The regulator requires companies to put a higher proportion into reserves than is the European norm. For example, BUPA was registered in the UK and put aside 25% of its premium income, but the regulator requires 50% of VIVAS Health. This figure may decrease to 40%, but it would be substantially higher than would be the case were the company incorporated elsewhere. If the VHI were incorporated in Northern Ireland, it could probably meet the reserve requirement in the morning.

The regulator is an independent body. In a previous job, I was responsible with the Minister for Finance for establishing an independent financial regulatory framework with a focus on consumers because there was too strong a focus on other issues. The Barrington and other reports have drawn attention to the regulator being too conservative, but we cannot interfere. It must make the decisions. I share Senator Twomey's opinion that health insurance is more predictable than insuring for, for example, hurricanes in other markets. I would like the regulator to lower the requirement to approximately 25%, as we would be able to authorise the VHI in a matter of weeks or months instead of waiting until the end of 2008. As for my philosophy, I do not care who actually owns companies as much as for a level playing field and fair competition. It is not just an ideological hang-up. When there is competition one gets innovation. If there is only one player, it does not have to think very hard.

I was in a friend's house recently and picked up a brochure they had received from a new insurer in the Irish market. I was very interested in its emphasis on an annual check-up, with 50% of the cost to be subsidised. General practitioner services were to be covered, to an extent, and I thought it offered a very good package. Like many other consumers I tend to be a creature of habit. The cost of my VHI insurance comes out of my monthly pay cheque and I do not really look at it. Thankfully, and touch wood, I have not had to use it.

In the leaflet I read I was very pleased to see the emphasis on an annual check-up. It seemed particularly geared to people over the age of 60 and that is a very good thing. The more we develop the area of chronic illness management the better because many people end up in hospital as a result of their blood pressure being out of control or they have not had their drugs reviewed by a doctor. Therefore, these are good services for citizens, patients and the health system. Such innovation arises when new companies come in and try to capture market share. I hope we will see more of it.

People may ask why BUPA was the only company to come into the market when it opened up. The reason is the large share of the market held by the VHI. We must make a decision and financial advisers have recently been appointed to my Department and the Department of Finance to advise on the best way for the VHI to meet the authorisation requirements by the end of 2008. The options include the taxpayer putting €140 million into the company, which would be instead of building a school or Garda station or hospital.

Alternatively, the Barrington group suggested mutualisation, which effectively means the members will become owners and raise the necessary capital. We could partly sell the company but there are a number of options. They are not for today and we will undoubtedly have a good debate about them. As legislation may be required, we as a Government and the Oireachtas as a whole will have to decide the most appropriate way of finding the money and investing it to make the VHI an authorised company like its competitors by the end of 2008.

A private hospital in Athlone was suggested. The citizens of Athlone have a low attendance record at accident and emergency units.