The Government is to publish regulations in the Dáil tomorrow that will result in a 20% reduction in future payments health insurance companies have to make under the risk equalisation scheme
Under plans discussed at cabinet yesterday, the derogation the Vhi had from meeting minimum solvency requirements is brought back from 2012 to 2008.
The Department of Health is to appoint legal and corporate advisers to assist the Vhi in finding enough reserves to meet the new target.
The changes to the risk equalisation scheme for health insurance companies will come into effect in July.
The Government is examining a proposal to encourage people to take out health insurance earlier by loading prices for individuals who take out insurance later in life.
This is one of a series of reforms which have been recommended to the Minister for Health in a report published today.
Fine Gael has said the new health insurance proposals need to be clarified and should not be rushed through the Dáil.
The party's Health spokesperson, Dr Liam Twomey, said there was no indication of the impact of the proposals on the cost of health insurance.
Dr Twomey said to rush the proposals through without debate would show scant regard for private health subscribers.
He also said the proposals suggest that the Minister is considering altering Community Rating and she must clarify if this is the case.
Labour Health spokesperson, Liz McManus, said the new proposals would drive up the cost of health insurance for subscribers.
She said it now seemed there was an agenda aimed at privatising the VHI. Deputy McManus said the way the proposals were published showed the arrogance of the current Government.
Barrington report recommends changes
A report into private medical insurance in Ireland has said that existing and prospective participants cannot make a return in the Irish market.
The Barrington Report, which was published this afternoon, recommends that a number of changes are made to the market here.
It says that community rating should continue to be applied.
But it says a simpler, more limited and transparent form of risk equalisation should be introduced which is not regarded as a subsidy to the Vhi.
The report also recommends that steps should be taken to immediately commercialise and regulate the Vhi.
And it said Government policy should encourage an increase in the size and the competitiveness of the private health insurance market.
The report said the private insurance market here is unstable, poorly regulated and unpredictable.
The report also said that the main reason for uncertainties in the market is the hugely dominant position of the Vhi.
The VHI said its 'initial fear is that these proposals will undermine community rating and create a price increase for health insurance in the long term'.
