Seán Barrett (Dún Laoghaire, Fine Gael)
Link to this: Individually | In context

Question 61: To ask the Minister for Health and Children the amount of money the State will have to inject into VHI in order for it to achieve solvency; and if she will make a statement on the matter. [25763/10]

Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context

Question 90: To ask the Minister for Health and Children the amount of public money she plans to invest in the VHI in advance of privatisation; her views on keeping the VHI in public ownership; the date on which she intends to introduce legislation to facilitate privatisation; and if she will make a statement on the matter. [25893/10]

Mary Harney (Dublin Mid West, Independent)
Link to this: Individually | In context

I propose to take Questions Nos. 61 and 90 together.

A key element of the Government's strategy for the future of the private health insurance market, is to establish VHI Healthcare in a position where it is authorised by the Financial Regulator and therefore regulated for prudential solvency purposes on the same basis as its competitors. The Government has committed to making a substantial capital investment into the VHI in order to secure its authorisation as a matter of urgency. The procedure for authorisation necessitates that VHI not only have sufficient capital in place to satisfy the requirements of the Financial Regulator, but also to display that it can sustain the necessary capital over a three to five year period. This will require VHI to demonstrate that it has a robust business plan in place which will satisfy these requirements. As Minister responsible for the VHI, I and my officials will be in close contact with the Board and management to ensure that such a business plan will be in place.

The actual amount of capital which will be required will be determined between the Minister for Finance and the Minister for Health and Children in light of the advice of experts. The level of capital required will be affected by a number of issues, including the amount of reinsurance and/or subordinated debt which the VHI may secure. It is not possible to specify precisely at this time what the figure for capitalisation will be. The timing for capitalisation and sale of VHI will depend on a number of factors, which will be decided by Government in light of the advices of the experts on the appropriate sequencing and structure of the disposal of the company. These experts will be appointed on foot of a competitive tendering exercise which I expect will take place shortly.

In relation to the plans for the State to divest itself of ownership of VHI, the Government's objective in so doing is to support the community rated private health insurance market and thus to protect older and sicker people. This requires risk equalisation (RE) to ensure that this happens.

In general terms, there are no specific health policy reasons for the State to own a private health insurance company, especially when the State is in a position to implement community rating supported by RE, and sets minimum benefit requirements for all health insurers. The planned RE scheme will require financial transfers between companies in the health insurance market. It is imperative that the Government is judged by all to be even-handed in this policy. The State should design and operate the RE scheme totally fairly and impartially as between each player in the market and be seen to do so. It is important that there should no grounds for complaint against the RE scheme in the context of the State setting up the scheme while owning a company that would receive payments under that scheme. It is also important that the RE scheme should not be delayed in its operation, or limited in its scope, because of queries about the State's ownership of one company in the market. Accordingly, the Government has decided that VHI should not remain in public ownership.