Finian McGrath
Ceist:934 Mr. F. McGrath asked the Minister for Health and Children his views, in detail, on correspondence (details supplied); and his further views on whether the 53% increase over five years is totally unjustified. [15543/02]
Written Answers. - Health Insurance Costs.
The position is that the setting of premium charges is the responsibility of the VHI board. The legislation requires the board to set premiums at a level sufficient to cover costs and make allowance for reserves. The board is, however, obliged to notify me in advance of putting proposed increases into effect. I may prevent the introduction of an increase, but must have good reasons for doing so.
Regarding the board's decision concerning a recent premium increase of 18%, the details provided by VHI in support of the need for such a level of increase were carefully examined. A key piece of information in the consideration process is the trend of likely claims which VHI will have to pay for on behalf of members. The forecast figures given by VHI in that regard strongly supported the need for such an increase. The trend in claims reflect high increases, both, in the price of medical services to members and the volume of claims by members.
On the basis of the information put before me, I formed the view that the board's decision was in accordance with its legal duty in setting premium charges. In that connection, I considered that it would be unrealistic to veto the increase involved, while expecting VHI to meet the needs of its members, in terms of benefits and coverage, together with maintaining the integrity of its finances.
The rate of increase in medical inflation is not comparable to the rate of increase in the consumer price index. This has been the experience in other countries also. VHI is obliged to incorporate into its premium increases a broad range of continuously evolving factors including, claims volume increases, new technology, new treatments, drugs etc, which are not captured by a standardised measure of inflation, such as the CPI.
I would, of course, prefer if annual increases in VHI premiums in excess of the CPI rate of inflation could be avoided. However, the additional income yielded is primarily spent in meeting the cost of ensuring that the best care is provided for all VHI subscribers, and that VHI will continue to be in a position to fund such care on behalf of their members.
Finian McGrath
Ceist:935 Mr. F. McGrath asked the Minister for Health and Children if he is considering preparing the VHI for privatisation; and if he has con sidered the implications for the 1.5 million subscribers. [15544/02]
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, were also addressed.
Further to the provisions of the White Paper, corporate finance consultants were appointed to examine and report on strategic options for the VHI. The consultants have now completed their report and it is currently under consideration. Ultimately, it will be a matter for the Government, having regard to all the relevant factors, to prepare the course of action that will best serve the interests of VHI customers, the company's competitive capacity and the wider health insurance market into the future. As any change of status for VHI will require legislation, the Oireachtas will have the final say on the course to be pursued.