Mary Harney (Dublin Mid West, Progressive Democrats)

Senator Fitzgerald asked about subsidiary companies, which must clearly be subject to the Financial Regulator as well.

When one is faced with a group of companies and when one of the competitors is itself a group, it is difficult to identify from where the money comes. It will be a matter for the Financial Regulator to regulate the position in that regard. At present, the VHI cannot become involved in anything other than health-related and other specific business. It launched its SwiftCare clinics on a joint venture basis and these are providing a good service and alleviating pressure on some of the accident and emergency departments in Dublin. I am aware that the VHI plans to expand its activities in this regard to Waterford, Limerick and other places.

It is not a bad thing for any company to have commercial freedom, provided it does not abuse its position. The purpose of the Bill is to facilitate the authorisation of the VHI at the earliest possible date. In my opinion, this will take place just over 12 months from now at the end of next year. That is an ambitious target. Following authorisation, the company will have the same freedom — because it will be subject to regulation in the same way — as its competitors to engage in appropriate activities, whatever those might be. I am not underestimating the fact that the sheer size of the company is an issue in terms of the clout it can bring to bear, particularly in so far as it deals with hospitals and doctors. However, many would say that its competitors have benefited from the VHI being able, by virtue of its size, to do deals with hospitals and consultants.

What most people desire is that the VHI should be subject to regulation and fair play. Of course its competitors and I would like to see its share of the health insurance market substantially reduced. The market would be healthier and there would be increased innovation, competition and better value for money for consumers if there were more players involved. The view of most of the experts is that we probably need five players in the market in order to have healthy competition. To date, the figure effectively stands at three. I hope some of the changes we are making will encourage new players to enter the market.

In the mid-1990s, when 38% of people had health insurance, there were many who felt the market was saturated and could not grow any more. Effectively, the new companies have grown their business by growing the market, which now comprises 52% to 53% of the population. As we become wealthier, as increasing numbers of people enter employment — 20% of people's health insurance is paid for by their employers — and as we change the nature of employment and the way in which people are remunerated, we can grow the market further. There will be opportunities, when the legislation is enacted and when the VHI is authorised on the same basis as its competitors, for new entrants to the market.

The necessity to inform consumers that they will not be penalised if they switch insurers could have a powerful impact on some because people like to support innovation. One of the VHI's competitors covers laser treatment, in which increasing numbers of people seem to be interested. In addition, the VHI itself has a dental care scheme. There are many more new services and products coming into the market and what we are doing will, I hope, give people the opportunity to consider switching once they are provided with the appropriate information.