Last Thursday the Minister for Health announced that the VHI will need at least €338 million to fill their solvency hole before the state owned private health insurer can be privatised by 2013.
It begs the question, how deep are the Irish taxpayer’s pockets given that this bill will be added to the €80 billion Nama one, and very possibly a mini-Nama to deal with the rising level of domestic property arrears and negative equity?
The sale of the VHI, said Minister Harney, is the only way now that the community-rated system of premiums that operates here and that ensures that the same price is paid for plans regardless of age, can be maintained.
Nevertheless, later this year, the Government intends to bring in ‘Lifetime Community Rating’ regulations.
This will establish an age after which the cost of private health insurance premiums will be higher than if consumers join a health insurance company before that age. The cut-off could be 30 or 35, say some insurance advisors.
The Minister has acknowledged the damage state ownership has done to the market.
Once this has been rectified with the sale of VHI, a fair and workable form of risk equalisation can be put in place, she said, the other element in ensuring that older people in particular will not be priced out of the market.
The fly in the ointment, however, is that there is no assurance that the VHI will be broken up to create ‘baby-VHIs’, as should have been done back in 1996 when Bupa Ireland came into the market and the VHI monopoly ended.
See The Munster Express newspaper for full story.