VHI will need new laws ‘to keep it in business’

THE next Government faces a massive headache drawing up complex legislation to keep health insurer VHI in business through some form of compensation for treating older private health customers.

The head of the Department of Health warned yesterday that VHI would be unable to continue without new laws, despite the insurer next week hiking charges by as much as 45%.

Secretary-general of the department Michael Scanlon admitted to TDs: “They absolutely have to have something in place by the end of the year. This will require new legislation for the new government.”

VHI, the country’s largest health insurer, has 92% of the over-80s market and four out of five health insurance customers over the age of 60.

An interim solution to prevent other insurers “cherry-picking” younger, lower-risk customers at the expense of older people through a system of levies will finish this year.

The compensation arrangement for VHI will see the insurer receive €70 million this year, mainly indirectly from competitors Aviva and Quinn Direct, up from €48m last year.

But the temporary scheme ends in December and VHI could not continue without new legislation, Mr Scanlon warned the Oireachtas Public Accounts Committee (PAC).

Mr Scanlon also admitted that there were issues emerging surrounding the hospital co-location scheme favoured by former health minister Mary Harney.

PAC chairman Bernard Allen said there had been no mention of co-location in the HSE plans for this year but that the agency had told him directly it still intended to go ahead with private hospitals on public grounds in Beaumont and St James’ in Dublin, in Cork, Limerick, Waterford and Sligo.