Mary Harney (Dublin Mid West, Progressive Democrats)

I am happy to do that. I indicated when we discussed the Bill on Second Stage that I intended to introduce a date by which the VHI had to become authorised and that date is dealt with in a further amendment, with which we will deal later. Senator Fitzgerald has an amendment tabled to this section which provides that the VHI shall not engage in any further new business before its becomes solvent. We provide in our amendments that the VHI cannot engage in new activities until it becomes authorised, which has the same effect. That is desirable and it has to establish separate companies for that purpose.

Senator Fitzgerald has an amendment tabled to a later section relating to the Competition Authority, which I will be happy to accept. However, in regard to overall market share, the VHI holds approximately 75%, Quinn Healthcare approximately 20% and Vivas Health approximately 5%. With the benefit of hindsight, one could say that when we opened up the market in the mid 1990s perhaps we should have examined the possibility of breaking up the VHI. That would not have been easy to do. The then Government would have been reluctant to do so because it is difficult to understand how one would have made it happen in reality without people moving to and fro.

Short of customers leaving the company, the VHI has the challenge of trying to remain in business — it will be authorised after the end of next year — and deal with its elderly group of members. Risk equalisation provides for intergenerational support whereby companies with a younger age profile will pay money over by way of risk equalisation to those companies which have older members but that is all subject to litigation. I do not know when the reality of that will happen, even though companies have to provide for it in their accounts and they have to accrue for it.

Short of taking a chunk of its members away from the VHI, I am not sure how in the short term we can effect a change quickly in the size of the company. I would like to do that and I have had discussions about instructing the board to reduce the size of the company. All of these matters will be considered in the context of a report due shortly, commissioned by my Department and the Department of Finance, from outside experts on the best way to help the VHI to become authorised, and whether it needs an injection of capital from private sources or Government in terms of whatever model is required to give it the capital to facilitate it being authorised. I understand that will be a matter for another debate.

I am anxious to ensure we have a competitive health insurance market in Ireland. We are introducing this legislation to establish the VHI on a commercial basis and the reason we are setting a date by which it must be authorised is to facilitate that because there has been a challenge at EU level, there have been complaints to the EU and significant complaints from other players in the market. There even have been complaints from those who have not entered the market because the VHI has a favoured position in not having to put aside 40% of its premium income to meet the authorisation requirements. This Bill addresses many of those deficiencies. It does not address the scale of the VHI in the current market and it is not easy to see how that can happen quickly.