Written Answers. - Voluntary Health Insurance Scheme.
Noel Ahern
Question:
514
Mr. N. Ahern
asked the
Minister for Health and Children
the future policy on VHI; if the privatisation of VHI is under consideration; if so, the timescale involved; if community rating will stand even if the VHI is privatised; if it will be sold on this guarantee; and if he will make a statement on the matter.
[13243/02]
Minister for Health and Children (Mr. Martin): The White Paper on private health insurance, published in 1999, set out the Government's proposals regarding the corporate status of the Voluntary Health Insurance Board. The White Paper provided for the establishment of the VHI as a company under the Companies Acts, with full commercial freedom of operation, in the ownership of the Minister for Finance. The possibility of third party investment and eventual full sale of the State's interest in VHI, if deemed desirable by the Government, was also addressed.
Specifically, the White Paper provided for the appointment of a corporate financial institution and legal advisers to advise the Government on any possible sale of the VHI. Following completion of the tender process, I, jointly with the Minister for Finance, appointed advisers to examine and report on the matter. The consultants have now completed their report and it is currently under consideration. It will be a matter for the Government to decide, in due course, whether or not to dispose of the VHI as a State company. Any change in VHI's corporate status will require legislation and will, therefore, arise for consideration and discussion in the Houses of the Oireachtas.
The issue of community rating is not related to the status of the VHI or any other insurer. Community rating and the protections necessary for its continuation are enshrined in legislation. The sustainability of this system in a voluntary environment is not just a matter of legislation, but is critically dependent on people joining private health insurance at a young age. The surpluses that young healthy people contribute to the system facilitate the insurance of older, sicker people at premium rates that would not otherwise be affordable. With this in mind the White Paper announced the Government's intention to introduce lifetime community rating and the Health Insurance (Amendment) Act, 2001, has provided the necessary basis for the making of regulations in this area.
Lifetime community rating gives insurers discretion to apply additional premium to people who enter health insurance for the first time at older ages. This will strengthen the system by encouraging entry to the community rated system at young ages and by providing that late joiners will, at the discretion of the insurers, be liable to pay sufficient extra premium to make up for the surplus they would have contributed had they joined at a younger age.
