Vol. 574 No. 5
73 Ms McManus asked the Minister for Health and Children the manner in which it is intended to apply the ?63.5 million allocated in the Estimates for 2004 for restructuring of the VHI; the Government's plans for the future of VHI; if the Government intends to privatise the company; and if he will make a statement on the matter. [27755/03]
The summary public capital programme 2004 was published on Thursday, 13 November by the Department of Finance as part of the Abridged Estimates Volume 2004. A figure of €63.5 million was inadvertently included as an issue towards the restructuring of the Voluntary Health Insurance Board. A technical contingency provision of £50 million –€63.5 million – was included in the 2001 and 2002 budget arithmetic arising from the 1999 White Paper on private health insurance. It was never drawn down or paid over. The figure was included in error in this year's summary public capital programme, PCP, and will not appear in the final PCP. An erratum to the AEV will issue to correct the error.
The Government has not been presented with proposals, nor has it made any decision, to privatise VHI. The only decision related to VHI's corporate status is that in the White Paper which allows for it to be moved to the position of a public limited company. It is my intention to bring proposals to Government at an early date for legislation in that regard. Whether such legislation should contain provision for further change in VHI's status has not been decided, but will be given consideration in the context of the proposal being prepared by my Department for Government.
I accept the Minister's explanation that there was an error in the inclusion of this figure. However, this raises questions about the issue of the money. Was there a policy of allocating money over the past two years with the intention of privatising the VHI and now that the money is not available, are we in danger of seeing the organisation being privatised? It seems curious that the Department of Finance would allocate money for two years running for the purpose of privatisation yet the Minister informs us there are no plans for this. The Labour Party would not support the privatisation of the VHI and I hope there are no such plans. If this money was allocated to the VHI over the past two years, was it not possible to use it in the health service that badly needs additional funding?
The greater the VHI's profits, the greater the increase in premia. Why is this the case? There has been an extraordinary increase of something like 48% in premia over the past four years. Will the Minister assure us that we are not seeing a pattern where, as the VHI becomes increasingly profitable, the public is asked to pay higher subscription charges? In making changes to the charges regimes, the Minister is adding to costs. Will he assure us there will be no further increases in VHI subscriptions in 2004?
Money was not allocated; it was neither drawn down nor paid over. When the White Paper was published, it stated that funding would be needed to provide for a once-off financial injection of £50 million to facilitate the restructuring of the VHI. The reserves of the VHI were considered to be well below the level usually required to seek authorisation as an insurer. The reserves have increased significantly in the interim. The premium increases have facilitated the build-up of reserves and, while we have been criticised for this, it is an example of good practice. It is no longer considered necessary to inject that level of money into the VHI were it to be privatised. The VHI would now be expected to stand on its own if it were to be privatised in the event of the Government taking such a decision.
Commercial freedom in a competitive market is an aspiration most Members of the House would share. As regards pricing, there is an issue whether Ministers should interfere in the company. With the exception of the issues around inflation and the maintenance of the social partnership agreement, my general philosophy is that a Minister should not try to run the VHI. It would be the wrong thing to do. Neither should the Minister try to second-guess the VHI on its day-to-day operational activities.
The Deputy is correct in saying its profits have increased. However, the three to four year expectations of the company do not indicate that it will realise similar profits year on year. I accept that these are estimates and plans put forward by the VHI. If we move to commercial freedom and believe in it, the VHI will have to set prices it feels it can command within the marketplace.
The VHI argues that health inflation and technology costs are increasing at enormous rates. We know this is a fact in the international health environment. Health expenditure, in both private and public contexts, is increasing across the globe. For example, there has been an enormous increase in the number of MRI scans carried out this year compared with the number carried out five years ago.
There is an equity issue at play regarding my decision to increase private bed charges. It is estimated that the major teaching hospitals receive 50% of the real cost of a private bed from the private health insurers. The White Paper identified this in 1999 and said it was unacceptable and should be dealt with.
