The Competition Authority report contains 16 recommendations, one of which is not to break up VHI. However, we note that in going forward there may be a need to look at fundamental structural issues, one of which may be to look at breaking up VHI. There are some simple reasons this issue arises. The report was written at a time when VHI had 80% of the market and we were looking at the potential exit of the second entity from the market. It is not surprising in a market with this level of concentration, where there is also a commitment to look at competition, that normal competition with significant rivals would not be possible in the short to medium term; therefore a structural remedy should be considered. In this report we do not endorse that, we do not recommend it, but we say it is something which potentially should be looked at into the future.
In doing so, a number of very critical questions have to be asked. One has to ask if ultimately the market will be better off with a structural remedy. Effectively, there are two large countervailing considerations. The first is that, generally speaking, with greater diversity in the market and less market concentration you will get more competition and that could drive efficiency. In the health insurance market, though, buying power can often be seen to work very much for the benefit of consumers because the buying power on behalf of the insurance companies can be a significant factor in restraining the growth of health care costs. Those two broad considerations must be looked at. In this report we do not endorse either approach.
Deputy Hogan asks what impact a breakup would have on premia. That is what the analysis should look at. Would the breakup of VHI drive efficiencies or would it dilute buyer power? On the other hand, would there be other ancillary costs? It is a rather complicated question and we do not come down with a recommendation that it should be done. We simply note that in the context of this market it may be something that should be considered at a future date.