The Government White Paper on private health insurance has recommended that the VHI be separated from the Department of Finance, clearing the way for a possible privatisation. The paper also recommends increased competition in the sector and contains measures, which will see private insurer's subsidise VHI because of its older customer base. The chief executive of the VHI, Oliver Tattan, has defended a proposal, that the company should be given a cash injection of £50million. He said the payment would be an investment, not a subsidy.

The Minister for Health has said the new health insurance plans will not form an obstacle to genuine competition in the private health insurance market. Brian Cowen was speaking at the publication of the White Paper on Health this afternoon. The White Paper includes proposals for changing the legal structure of the state owned VHI from a statutory board to a commercial semi-state company and the setting up of a ‘risk equalisation scheme’ which is aimed at ensuring new entrants to the market do not sign up only young members.

For customers, the new semi-state structure of the VHI means that the company will no longer require ministerial approval prior to increasing premiums. Over 1.5 million people have private health insurance and the bulk of these are VHI customers. Its main competitor BUPA, which entered the market two years ago, has 100,000 members.

Labour Health Spokesperson, Liz McManus, has described the White Paper on Health Insurance as a missed opportunity. She said it could have been the start of a debate about a health insurance system, which could deliver equality of access and quality care. "Instead", she said, "we have a long awaited paper, which advocates little change in the existing status quo". She accused the Minister of simply “tinkering” with the system.