Government reveals plan to sell VHIThursday 27 May 2010 23.15
The Government has announced plans to sell VHI Healthcare - Ireland's largest health insurer.
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At a briefing at Government Buildings, officials from the Department of Health said it did not expect premiums to change, or the 900 jobs at VHI to be affected.
Announcing its privatisation, Minister for Health Mary Harney said it was her priority to make sure that insurers treat their customers equally, irrespective of age or health.
The company will not be sold until it reaches the solvency ratios that apply to other health insurers.
Prior to its sale the State is to make a substantial capital investment in VHI to help it attain the solvency levels.
Speaking on RTÉ News the minister said the VHI needed to be regulated and needed an injection of capital to do that and sums in excess of €300m may be required.
Mary Harney said that the VHI has to be authorised, unlike it's competitors who are regulated by the Financial Services regulator, the VHI is not regulated, it has a deregation from regulation.
Minister Harney said that currently the VHI does not have to put aside 40% of it's premium income into a reserve to meet regulatory requirements.
She continued that 'the first thing that has to happen is the VHI has to be regulated, it needs an investment of capital.
The Government are going to appoint advisors to advise the Government, what scale of capital is required, in order to allow the VHI to be regulated.'
The sale of VHI is to coincide with the full introduction of a new risk equalisation scheme, which will be introduced in 2013 and on a transitional basis in 2012.
The scheme would require some insurance companies to pay compensation to others with a larger number of older customers.
VHI currently has a larger proportion of older customers.
Officials would not say how much they expect the company to be sold for.
There has been a mixed response to the Government's decision.
The Fine Gael Health Spokesperson, Dr James Reilly, said the Government plan will not end the two-tier health system, cut waiting lists and address the high price of insurance premiums.
He said private health insurance subscribers will feel very insecure at the news that the two major providers in the Irish market will now be on sale.
Labour Party Health Spokesperson Jan O'Sullivan criticised the VHI announcement, saying that Fianna Fáil had no mandate for the plan.
She said the sell-off would not be in the interests of VHI members and that it would do nothing to contribute to the development of a fairer health service.
Sinn Féin Health & Children Spokesperson Caoimhghín Ó Caoláin said it was a step in the wrong direction.
He said the privatisation was part of what he described as the fundamentally flawed health policy of the Fianna Fáil/Green Government and its predecessors who, he claimed, have maintained a grossly inequitable two-tier healthcare system.
The Health Insurance Authority welcomed the announcement, saying that without appropriate supports, older and less healthy people would pay more on average for their health insurance.
While the Unite trade union, which represents workers at VHI, reacted cautiously.
It said its primary concern will be to maintain the current level of jobs in the company.