John Gilroy (Labour) | Oireachtas source

I welcome the Minister, Deputy James Reilly, to the House and thank Senator Feargal Quinn for bringing forward these proposals. Although I do not propose to support the legislation, it affords us a welcome opportunity to discuss issues relating to the health insurance market The explanatory memorandum refers to the significant decline in recent years in the numbers availing of private health insurance. Indeed, some 266,000 people have left the market in that period. As the Minister said, we must find a way to ensure that as many people as possible can retain their health insurance. The Minister pointed to some of the market reforms he has introduced to that end and to initiatives such as lifetime community rating, which offers a form of discounted access to the market according to need and age.

The explanatory memorandum notes that health insurance providers are required to have a solvency margin of 150%. VHI recently announced that it has free cash reserves of €389 million, which gives it a solvency ratio, at 160%, over and above what is required. As such, the need for this element of reform, as set out in Senator Quinn's Bill, is unfounded. With 1.1 million customers, VHI is the largest provider of health care insurance in the Irish market. It is the best guarantor of community rating and risk equalisation, which we all agree are necessary and desirable. It is, of course, necessary to ensure a level playing pitch, but there are some aspects of the public good which the market is simply not able to provide. Health care is one of them. The Minister noted in his contribution that we can see some evidence of a lack of dedication to the public good on the part of private companies, which, notwithstanding their denials, are offering market segmentation strategies. We know this is happening and we know it is not in our interest.

VHI achieved a profit of €65 million last year, coming on top of a figure of €54 million in the previous year, and its operating costs are down. There has been much criticism of the company historically, but these numbers show it has taken significant steps towards reforming itself. While it was necessary to impose a 3.1% increase in premium costs this year, that price rise is significantly below what was sought by its competitors. The four-year Berkshire Hathaway reinsurance scheme, which will cost VHI €20 million per year, means the Exchequer probably will not have to close the €200 million gap in the company's reserves. Taking the reforms VHI has initiated itself together with those imposed on it by the Minister, the Health Insurance Authority and the market itself, plus the vote of confidence by Berkshire Hathaway, the outlook is very promising for the long-term sustainability of the company.

The proposal in the Bill to transfer regulatory authority from the Health Insurance Authority to the Central Bank is not one I support. The HIA has the capacity to perform certain specialised functions that are not available to the Central Bank. When it comes to balance sheet issues or prudential issues of regulation, the Central Bank is the place to be. However, the authorisation sought by VHI later on in the year addresses that aspect of the Bill's concerns.

The contention of a perceived conflict arising from the Minister's function as shareholder as well as steward is to be resolved under Senator Quinn's proposals by moving responsibility from the Department of Health to the Department of Public Expenditure and Reform. This is not a proposal I support. Again, the HIA has specialised functions that are simply not available in that Department. Moreover, transferring responsibility in this manner would not be consistent with the ongoing and longer-term objective of the Government and Minister to introduce a system of universal health insurance.

I could comment further on the proposals but the Acting Chairman has indicated that my time is up. The provision of health insurance should not be determined by the identity of the provider, whether private operator or the public sector. The determination as to whether a system of voluntary health insurance works must be based on whether it is efficient in delivering the best level of care at the best cost to the Exchequer. While we do not propose to support the Bill before us today, I thank Senator Quinn for affording us an opportunity to air some of the issues relating to VHI and other health insurance companies.