Joint Committee on Health and Children debate -
Thursday, 19 Feb 2015

VHI: Chairman Designate

Chairman

We will resume in public session. I remind members, witnesses and those in the Visitors Gallery regarding mobile phones. We have apologies from Senator Imelda Henry, Deputy Catherine Byrne, who had to leave us unexpectedly, and also from Deputy Seamus Healy.

The purpose of our meeting is to discuss with the chairperson-designate of VHI, Mr. Liam Downey, whom I want to welcome, congratulate on his appointment and thank for being here, his appointment and the approach that will be taken to the challenges currently facing the company. As members are aware, a 2011 Government decision resulted in committees having a greater role in scrutinising appointments to State boards and bodies. The committee welcomes the opportunity this afternoon to meet with Mr. Downey, the chairperson-designate, in this public session to hear his views. We trust that this will provide greater transparency to the process of appointments to our State boards and bodies. On behalf of the committee, I welcome Mr. Downey formally to the meeting, along with Ms Brighid Smyth from VHI, who is in the Visitors Gallery.

Before we commence, for the benefit of officials attending, I will remind people about privilege. Witnesses are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable. I also wish to advise that the statement provided to the committee will be published on the committee website after the meeting.

I call on Mr. Downey to make his opening remarks.

Mr. Liam Downey

I thank the Chairman and committee members for the invitation to appear before the committee to discuss my appointment. I was pleased to be asked by the Minister for Health, Deputy Leo Varadkar, to become the chairperson of VHI. Following a request by the committee, I welcome the opportunity to introduce myself and set out the main issues and challenges facing the private health insurance market generally and VHI in particular as well as to outline the future priorities for the organisation. I will summarise the key points in this short oral presentation. The committee members have been given more detailed information in a longer written presentation so I will simply summarise some of the key points.

I will begin with a brief summary of my background. I graduated from University College Dublin with a bachelor of commerce degree. I am a member of the Chartered Institute of Personnel and Development and a fellow of the Irish Management Institute. Most of my working life has been spent in the health care sector. I worked for more than 30 years in the medical technology industry with a leading US multinational company. In that time I gained extensive management experience of national and international business affairs and management practice. I am a former president of the Federation of Irish Employers, a former director and trustee of IBEC and a former chairman of the Irish Medical Devices Association. I served for several years as a member of the Labour Relations Commission as well. I was chairman of the Health Service Executive for a little over five years and I have been a non-executive director of VHI Healthcare for more than four years. In summary, I consider that I have extensive experience and knowledge of business management practice in Ireland and internationally. Furthermore, I have had a close involvement with the health care sector over many years from the perspective of supplier, provider and, more recently, private health insurance. I also have experience of executive and non-executive roles and am familiar with the private and public sectors.

VHI has operated as a profitable and sound business since its establishment as a State monopoly in 1957. The company met and successfully dealt with the advent of competition in the 1990s and has continued to evolve and innovate. It has developed successful businesses alongside its core health insurance business and has been responsible for bringing many innovations to the marketplace, including VHI Swiftcare clinics, VHI HomeCare, VHI Dental and VHI MultiTrip.

With almost 1.1 million customers and over five decades of experience, VHI is the market leader for health insurance in Ireland and is the insurer of choice for many corporate schemes. VHI employs approximately 1,000 people spread across six different locations in Ireland. The bulk of these employees are now based in our state-of-the-art business centre in Kilkenny.

In recent years, the company has delivered a solid financial performance against the backdrop of a contracting marketplace and in the face of ongoing economic pressures. This is as a result primarily of a focused cost containment programme. In 2013, the year of the most recent published accounts for the company, VHI recorded a surplus after tax of €65 million on its consolidated business for the year ending 31 December 2013. This surplus represents a profit margin of 4.4%, in line with the industry norm. In addition, VHI improved its solvency position and maintained a low operating cost ratio. The 2014 results will be published in the coming months and will show continued good performance.

I will set out the key challenges in the private health insurance market. The first relates to preserving the community rated market. Ireland has a robust private health insurance market despite the impact of the economic downturn, with 45% of the population still choosing voluntarily to purchase private health insurance. The Irish private health insurance market, unlike other insurance markets such as motor and home insurance, is community rated. This means that the price everyone pays for their health insurance plans is the same regardless of age or health profile. However, the reality is that while everyone pays the same amount, not everyone costs the same and this is the crux of the issue. This is why risk equalisation is essential and without it the market would simply collapse. Risk equalisation in its simplest form is about sharing the claims costs of the old and the sick among the young and the healthy across all the private health insurance companies. The risk equalisation scheme has to be dynamic. It needs to be continually changed, improved and developed to reflect the changing nature of the market. In this regard, more needs to be done to develop the health status aspect of the scheme in order that the health status of customers is properly taken into account.

In recent years, the Government has taken several steps to address these issues and stabilise the health insurance market. Policy statements on risk equalisation issued in 2013 and 2014 are designed to strengthen the risk equalisation scheme in support of community rating and to begin to take account of health status as well as age. The Government announced two further policy objectives late in 2014, namely, the introduction of lifetime community rating, which serves to incentivise customers to take out health insurance early and retain cover as well as discounts for young adults to address the fall in market penetration in younger age groups.

The second main challenge facing the sector is one of affordability. This committee has addressed the issue several times. While the health insurance market has proven to be relatively resilient over recent years compared to other sectors, affordability constraints have resulted in a declining health insurance market. This decline has been most pronounced at the young profitable end of the market. Since 2009, there has been a fall of almost 32% in the number of young people, those between 18 and 29 years of age, with health insurance cover. This results in upward pressure in premiums for all remaining holder of private insurance.

VHI is acutely aware of the considerable financial pressures facing our customers. Our focus has been on delivering quality health care at the most affordable price. In January 2015, we announced premium reductions on seven plans and confirmed that there will be no price increases on any other plans at this time. This means that for the third year in a row VHI has had lower price increases than any of our competitors. We have managed to do this because we have been totally committed to managing costs and increasing efficiencies in our business. We have been driving a cost containment programme since 2009 and this has generated significant savings in several key areas. This has been achieved through a combination of measures, including the implementation of targeted claims efficiency programmes, reductions in fees paid to consultants and providers, the increased activity of our special claims investigation unit and the continued transition of procedures to lower-cost medically appropriate settings. Details of the savings achieved are included in the more detailed written statement provided to the committee.

A key element of our cost containment strategy has been to identify ways of doing things smarter and better rather than simply cutting costs. One of the best examples is the VHI HomeCare service, which began in 2010. This has delivered excellent results, treating 3,000 patients, saving 40,000 hospital beds and delivering savings of €13.5 million for our customers. This is a consultant-led service which provides hospital-in-the-home type treatment to our customers. It allows them to receive high-quality care in the comfort of their own home.

I will set out my future priorities and those of the company. The immediate priority for VHI in 2015 is to secure authorisation by the Central Bank of Ireland. The bank continues to assess the application to determine VHI's readiness for authorisation and we continue to work closely with the bank in respect of our application. In 2014, we put in place a long-term reinsurance agreement with Berkshire Hathaway and strengthened our capital reserves in support of our application for authorisation. The capital requirement will be determined by the Central Bank as the independent regulator following its assessment of the VHI application.

Another priority for the business is to ensure that we have in place the necessary team to operate effectively in an authorised environment. In this regard I welcome the recent appointment of appropriate additional expertise to the board. I believe this will broaden and strengthen the skill-set of the board and provide relevant oversight of our business. I wish to draw attention to the strengthening of management capability in key areas such as risk management, actuarial expertise and data analytics. I was directly involved in the appointment of the current chief executive, John O' Dwyer, as chairman of the selection committee. He has vast industry experience and has had a singularly positive impact on the business to date.

I have every confidence in his ability to lead VHI into the future and look forward to working more closely with him.

The next priority is that we continue to work on the evolution of our business strategy to ensure effective business plans and related risk management activity that will ensure continued and increased success for the company. There is a great opportunity for VHI to leverage its scale and medical expertise to devise new approaches to managing health care that will deliver a competitive advantage for the company but will also deliver better health care outcomes for our customers. While we need to continue to deliver affordable health care, we also need to develop models of health care that tackle the serious demographic changes taking place in the country. The Irish population is ageing and people are living longer with more chronic illnesses. We need to provide for this. We also need to promote a new model of private health insurance that will deliver high value, effective, quality care and at the same time deliver improved health care outcomes for customers.

Another key priority is to enable young people and young families to return to the private health insurance market. In order to achieve this we will continue to prioritise cost containment and drive down costs, increasing efficiencies and focusing on providing affordable health care for our customers. We welcome the introduction by the Government of lifetime community rating as it will lead to a stronger and more sustainable market over time, with younger people actively participating in the market. We look forward to its introduction on 1 May and will compete robustly for our share of the market. In fact, only this week we announced the introduction of two new hospital plans, VHI Start Plan and VHI Start Plan 250, which are ideally suited for people taking out health insurance for the first time. With premiums from €449 per adult and €99 for a child, the plans offer private health insurance at an attractive price. Encouraging young people to join and stay in the market is the key to keeping private health insurance affordable.

My objective and that of the board will be to ensure VHI Healthcare is well directed and managed in accordance with high standards of governance to deliver performance excellence and sustained success of the business. The purpose is to ensure VHI will continue to be the number one health insurer of choice committed to delivering quality health care solutions for the people of Ireland. In that way we will also ensure it remains a valuable asset for the State and a beneficial resource for its people.

I thank the Chairman. I am now happy to answer questions the committee may have.

Chairman

I thank Mr. Downey for his very comprehensive presentation.

Deputy Billy Kelleher

I welcome Mr. Downey and wish him well as chairman designate of the VHI board. It is a challenging and exciting time for the health insurance market as the economy recovers and we try to encourage more people to try to take out private health insurance. Three little letters not mentioned in Mr. Downey’s presentation are UHI, universal health insurance. Where does he see VHI fitting into the Government’s policy on universal health insurance, particularly in respect of what he says about priorities and the need to attract young people into the private health insurance market and encourage young families to return to it? If we are to have mandatory universal health insurance by 2019, what is the incentive for a young couple, or a young person, to take out health insurance when UHI will be obligatory?

The Central Bank authorisation is obviously a big challenge for VHI. It has done a deal with Berkshire Hathaway as an underwriter. What are the delays in authorisation? Is it continual due diligence by the Central Bank or are there difficulties about who is the ultimate underwriter of VHI in providing adequate capital? Is Berkshire Hathaway or the State the final underwriter? Who will underwrite any difficulty that may arise in the event that VHI does not have adequate capital for some unforeseen reason? What is the delay, as there have been requests to move several deadlines recently? We have tabled questions to the Minister on this subject on several occasions. Why has it not received authorisation?

Chairman

I remind the Deputy that this meeting is about the appointment of the chairman designate as opposed to the day-to-day operations of VHI.

Deputy Billy Kelleher

Mr. Downey was a member of the board and has a deep knowledge of the workings of the organisation. It is important that the chairman has a clear vision of where VHI is going in the context of Government policy and the issue he raised about Central Bank authorisation.

In the short to medium term VHI is the dominant player in the health insurance market. Many organisations, even the Health Insurance Authority, HIA, raise the issue of the plethora of health insurance policies available and the confusion they can cause for people in trying to compare policies. Does Mr. Downey believe the HIA should be more robust in ensuring a streamlining of the number of policies on offer in order that people can make a quid pro quo comparison of like policies as we encourage more people into the market and shop around? We need to ensure there is competition.

VHI has performed very well in recent years in a very challenging and difficult environment for private health insurance companies. The cost containment measures it has put in place are very welcome and more must be done in that regard.

Where does Mr. Downey see VHI’s role in respect of private hospitals seeking recognition and VHI cover? Does he believe there are enough private hospitals or is there always room for more? Is there enough capacity in the system? Does he believe every insurance company, including VHI, should be concerned about supplier-induced demand or is that a fear of competition in another form?

I wish Mr. Downey well and thank him for his service to date in his many roles, including in the Labour Relations Commission. I wish him the best of luck.

Deputy Caoimhghín Ó Caoláin

I welcome Mr. Downey and thank him for his presentation. When he talks about preserving the community rated model, which we all accept, he states:

Competition to date has been solely focused on attracting and retaining younger lives and in order to preserve the community rated market it is essential that companies are not rewarded for doing this.

Would he like to explain what he means by “not rewarded for doing this”? They are operating in an open and competitive marketplace. From where would the reward come? The meaning of the sentence is not very clear to me. In an open and competitive market such as this companies make the effort to attract a cohort of new business and one would expect a natural reward to come from their efforts. I would not see the reward as being in conflict. Surely they are entitled to a reward for their efforts to attract new business.

That of itself would not be in conflict with the retention and preservation of the community-rated approach. That would be my understanding of it. Maybe there is something I am missing in that and Mr. Downey can help me to better understand it.

Mr. Downey has said the immediate priority for the VHI in 2015 is to secure authorisation by the Central Bank of Ireland and, he says, the Central Bank is continuing to assess the application to determine the VHI's readiness. Would he explain, readiness for what? Would he elaborate on what exactly the application refers to? What is it that the VHI is readying itself to undertake, other than its traditional core business? Is there some new departure under the Central Bank in terms of what the VHI would seek to address in the future?

We have been asked to meet and question Mr. Downey on his appointment as the new chairperson designate of the VHI. He made the point in his presentation that he was the chairperson of the selection committee that made the selection of the new CEO of the VHI. Does Mr. Downey think there is any conflict in that respect? He chaired the selection committee that determined Mr. O'Dwyer would be the new CEO, and now he has been appointed chairman of the board. Some would say that is altogether too cosy. I am not suggesting that but I am asking Mr. Downey for his view. Would he think that there is any conflict, or that the relationship may be in some way too close, or that it might even compromise the independence of the board from the CEO and those with responsibility for the day-to-day running of the affairs of the company? It is a relevant question. I join with Deputy Kelleher in wishing Mr. Downey well in his new responsibilities.

Senator Colm Burke

Mr. Downey is welcome. I apologies for being late, I was in the Seanad dealing with a health issue. I have read Mr. Downey's presentation, in which he refers to 29 areas in which the VHI has changed the cover it provides from inpatient to outpatient. This is something I have raised on a number of occasions over the last three or four years. Is this process going to continue and does Mr. Downey believe further work can be done on it? Medicine has moved on now and there are many areas where a day-care procedure can be provided rather than an inpatient one. Can there be further changes over the next 12 months or two years, and what kind of savings can be made?

The second issue I wish to raise, the growing aging population, is very much to the fore in current health debates. That will automatically create demands on health care. Has the VHI looked at the changes that will occur over the next five to ten years as regards the demand on services? What level of increased costs are we talking about and will this in turn affect the kind of moneys that will be required for health cover? We have over 585,000 people over 65, and over the next 16 years that figure will go very close to 990,000. That is a very short period in real terms. Has the VHI looked at this issue in terms of the system as it exists at the moment?

Deputy Robert Dowds

Senator Burke has asked my main question. I will be interested to hear the answer. The costs for people in the VHI are astronomical at the moment and some people must find it very difficult to pay. Has there been a decline in customers because of that?

Deputy Sandra McLellan

I welcome Mr. Downey and wish him well in his new role. Senator Burke has covered the question I was going to ask. Following on from that, Mr. Downey mentioned the VHI home care service and the treatment of 3,000 patients, saving 40,000 hospital day beds. Could he outline the nature of those services?

Mr. Liam Downey

I thank the committee members for their questions, and will start with Deputy Kelleher's. Universal health insurance is a matter of Government policy, details of which will be developed in due course, I am sure, and will be a matter of national debate and discussion. When the White Paper was originally issued, the VHI welcomed it and we look forward to engaging fully in the process and playing an appropriate part in the evolution of universal health insurance. Our position is that we are ready and willing to engage and participate when more information is available on the exact design of the universal health insurance scheme. We would expect to be consulted on it because we have a great deal of knowledge and background information that would be very helpful in that context. I am not sure there is much more I can say at this time, except that we stand ready, with our record, history and knowledge of the market, to assist and support. We hope we will have an important part to play in developing the universal health insurance plan, if it happens.

The incentive for young people is an interesting point. There is the risk that if people think something else is happening, they will delay and not bother with taking out health insurance in the meantime. However, people also realise that they have to live in the current situation and must have cover for themselves and their families if they can afford to do so. That is why affordability is such an important issue. I am sure there will be transitional arrangements for people who are already in health insurance to transition to any new plan, such as universal health insurance. That will come later. I do not see it as a big disincentive at the moment.

The big issue people have at present is the affordability question. They will have to pay for their health insurance, whether it is to a private company, or later as part of a universal health insurance scheme. It makes sense for them to be in a plan sooner rather than later and that is why we welcome the lifetime community rating initiative. The sooner people get into the plan, the better.

There were a couple of questions regarding the role of the Central Bank, the question of underwriting and who the ultimate underwriter will be.

Deputy Billy Kelleher raised the question of a delay. Last year we applied to be authorised and made a detailed submission to the Central Bank. There has been ongoing dialogue and discussion since on the application. It is constructive, and the Central Bank is still giving consideration to our application. We must remember, however, that it is an independent body and the final arbiter. The question of approval is a matter for it only; it is not something within our gift. We are engaging very closely with it and hope it will happen as early as possible.

With regard to capital and the business of underwriting, VHI previously indicated that the European view was that it was unfair competition if a government supported an individual player in the market. We have set about raising our own capital and having our own resources in place without Government support in order to satisfy Central Bank requirements. That is why we put in place the arrangement with Berkshire Hathaway and added to our reserves in the past two years through our good performance. It is in order to reach a capital figure which we hope will be acceptable to the Central Bank. It is in our hands and we have taken responsibility for it. We do not envisage receiving Government support as part of the application.

There was a question about the number of policies we had on offer in the insurance market. There are approximately 90 policies on offer from VHI and members or anyone else can apply for any of these. In the earlier days, when we did not have competition, there was a handful of four or five policies. As a result of competition, more policies have come into play that have been designed to meet the needs of particular segments of the market. I agree that in the ideal world it would be better if there were fewer policies and more clarity and in some respects it would be easier for people. On the other hand, they like choice and one of our competitors offers the opportunity for them to build their own policy. They can design any policy they wish. This is a product of competition and something driven by those targeting different parts of the market, developing products specific to particular segments of the market.

There was a question about capacity and private hospitals. From my experience, I know that demand can be induced by supply. As part of our drive to ensure we manage costs well, we must try to ensure we do not sanction more demand than is required in the market. When we are asked to sanction new hospital capacity, we put it through a very rigorous process whereby we satisfy ourselves that there is not already enough capacity to meet the need. In that way, we try to avoid the scenario where there is overcapacity in the market. It is a well known fact in health care that medical technology and supply drive costs upwards. It is certainly something of which we are very aware and there is a rigorous system in place to ensure we critically examine any request received in that regard. We will not approve additional capacity if it is not required or it will impact on the affordability question.

Chairman

Mr. Downey may not have the relevant figures at his fingertips, but in the past year has the company received many requests for new hospital set-ups?

Mr. Liam Downey

There have not been many. Although I cannot be specific, I know that one is in the course of discussion. There have not been many in recent times because private hospital development is not as attractive as it was in the past; therefore, we have seen less of it.

Chairman

Is there any role for a public-private partnership in the provision of health care or the creation of new hospitals?

Mr. Liam Downey

VHI has no particular position on that issue. I do not have a view on it. Deputy Caoimhghín Ó Caoláin asked about the reward for attracting younger people. That is linked with the question to which I referred of policy proliferation, etc. With the advent of competition, there has been much greater segmentation of the market. It is much more attractive for insurers if they can look to get as many of the younger cohort of the population as possible on the books and avoid taking those with the highest number of claims. Generally, as one might expect, younger people incur fewer and lower claims, while older people incur a higher cost. It is attractive for the competition to target young people so as to gain the premiums without the costs. VHI has a 57% market share but a much higher proportion of claims and costs because it has older members. We must have a level playing pitch in how the market is conducted, which is what community rating and risk equalisation provide. Those who target only younger people should not be rewarded for doing so. The basics of competition in the market should be level for everybody; that is why the risk equalisation scheme is so important. It compensates for the incentive to only target the young section of the market.

There was a question about the conflict between my role as chairman-----

Chairman

I advise Senator Colm Burke that there is a vote in the Seanad.

Senator Colm Burke

Thank you.

Mr. Liam Downey

The question was about a potential conflict, but I do not see any.

Deputy Robert Dowds

Perhaps Mr. Downey might answer Senator Colm Burke's question before he has to leave.

Mr. Liam Downey

Of course. It concerned inpatient and outpatient day care treatment, etc. There are other opportunities for further development. The way to manage costs in the health care sector is to treat patients at the lowest cost point in the system. That is why we seek to avoid or reduce the length of hospital stays. Treating patients in outpatient, day care and side-room scenarios, or ideally in a person's home, is the best way to achieve this, but it can also be done in primary care centres. This is the same model of care that the public system is trying to develop and it makes sense from a health insurance standpoint. We have much in common with the public health system in that regard.

In our discussions with the providers of services we will be continuing to do everything possible to ensure patients are treated in appropriate settings and at the lowest cost. There will be more opportunities in this regard in the future and we will be continuing to target them. I cannot specify the exact nature of the savings involved, but what we are doing will directly address the question of affordability of health insurance, which is a major issue to which we continue to return. As has been pointed out, we have an increasingly ageing population and there is going to be pressure because of the increasing cost of health care. We need to ensure health care is provided, in so far as is possible, in the lowest cost setting. We must also ensure it is provided in settings which are most suitable and convenient for the patient. We have good synergy between these two objectives.

On the conflict in the appointment of the CEO, I understand the point made. However, I do not see any conflict in that it is the board's responsibility to identify a CEO. In order to facilitate, supervise and manage the process in that regard, a committee of board members is set up. That is what happened in this instance. We also use external resources such as a search company, advertising, etc. That is also what happened in this case. I was chair of the remuneration committee and was also appointed as chair of the selection committee. We used external consultants to help us. The Minister for Health has final responsibility for signing off on the approval of the successful candidate. It is part of a board's responsibility to appoint a CEO. It just so happens that I was a member of the committee which did so in this instance. Other members of the board were also involved, which is normal practice in such instances.

Deputy Robert Dowds

Will Mr. Downey indicate whether the use of alternative means of treating people - for example, through primary health care centres - will enable VHI to reduce the cost of premiums or is it likely that this cost will continue to increase substantially?

Mr. Liam Downey

It is difficult to say what the exact impact will be. Obviously, there are also upward pressures on costs. The costs for developments in medical technology and health care generally tend to run at a much higher rate than in other sectors of the economy. We are always obliged to deal with these upward pressures. What we always try to do with measures such as those to which I refer is offset and minimise the impact of increases. It is difficult to say what the exact outcome will be in terms of the pricing of premiums. I have referred to the fact that this year we have managed to reduce the costs of some of our packages and that we have had the lowest costs in the market for the past two years. That is an illustration of how this process can bring benefits. Our objective in the future will be to continue to pay the highest attention to cost management across the board in terms of how care is delivered and contractual arrangements with providers. That is important in ensuring providers attain the highest rates of efficiency in delivering the services for which we pay. Internally, we will also focus on our own cost base - in terms of administration, etc. - in order that we might manage our business very efficiently. All of this will contribute to keeping costs at the lowest possible level, which is the best way to ensure premiums are also kept at the lowest level. At this stage, I do not know what exactly-----

Deputy Robert Dowds

How many members did VHI lose during the recession? Are there indications of what the current position is on membership?

Mr. Liam Downey

As the Deputy is aware, there has been a downturn in the market in general. In my submission I mention the position on the retention of younger lives. In 2008, when things were good, market penetration, rather than the percentage of people in the market who were members, stood at 51%. This figure has dropped to approximately 44% or 45% across the entire market. Unfortunately, the biggest impact has been felt in respect of the retention of younger lives, which, going back to the issue of risk equalisation, is why it is so important that we have in place a scheme that is effective. VHI has lost members, but, happily, the decline in membership has started to tail off in the past couple of years. I am hopeful the position will stabilise this year. It is a matter of record - the relevant material can be found on the Health Information Authority's website - that VHI membership has declined by in the order of 400,000 during the years. However, the figure is starting to stabilise and we hope, with the advent of lifetime community rating in the coming months, to begin competing again in order to gain new members. We look forward to increasing our membership as more people can afford to pay for health insurance. The entire market, including VHI, lost members during the difficult years.

Deputy Caoimhghín Ó Caoláin

I seek further clarification on the application for authorisation to the Central Bank. Will Mr. Downey explain the position on VHI's readiness for authorisation which is being assessed by the Central Bank? To what does it relate? Does it relate to VHI's ability to continue its core business? The clarification I am seeking is necessary. If this matter relates to core business, what is the distinction between being authorised and not being authorised if VHI is continuing to carry out its functions? There is something missing in this regard and perhaps Mr. Downey might provide the relevant information.

Mr. Liam Downey

I apologise. I missed out on that point in my response. In the first instance, we must be authorised to conduct our current business. The European Court of Justice has ruled that state support is not appropriate. I referred to risk equalisation, but to have consistency across the market, VHI, as a State company involved in the private health insurance market, should be regulated and authorised in the same way as other companies. We need to be authorised in order to properly conduct our existing business. When we are authorised, there will be an opportunity to widen the scope of our business in certain directions. This could provide further opportunities for VHI. One of the benefits of being regulated is that it allows the company to carry out other activities which are related to the business in which we are involved. That is a matter we will be examining in order to discover the opportunities it might be appropriate for us to pursue post-regulation.

In the event that the Deputy is not aware of it, we have regulated entities within the VHI group. I refer to what we term our "diversified businesses". These are businesses other than those relating to health insurance and the entities involved were regulated some years ago. What we are talking about regulating in this instance is the private health insurance business of VHI. As stated, we are also involved in a range of other businesses - the SwiftCare clinics, HomeCare and so on - which are already regulated. When we talk about readiness, we are referring to opportunities regulation will offer us in expanding our business in an appropriate way in the future.

Chairman

On my behalf and on behalf of the committee, I thank Mr. Downey for his engagement with us in an open, informative and transparent way. The meeting was productive and informative. I wish Mr. Downey well in his appointment and in his term of office. I hope he has a successful tenure in achieving some of the goals outlined.

I propose we send a transcript of our discussion to the Minister for Health for his information and consideration. Is that agreed? Agreed.

The joint committee adjourned at 1.10 p.m. until 9.30 a.m. on Thursday, 26 February 2015.