McCreevy threatens court action over VHI stance

EU Commissioner Charlie McCreevy has threatened to take the Government to court over the preferential treatment they give to the Voluntary Health Insurance (VHI).

But he is likely to be deprived of his day in court as the VHI has already agreed to come into line and have 40% of its premiums set aside next year.

VIVAS Health complained to Mr McCreevy last year over the fact that under insurance legislation they had to set aside 40% of their premiums, but the VHI didn’t.

Mr McCreevy examined the situation and wrote twice to his former colleague, Health Minister Mary Harney, demanding an explanation.

Yesterday, he gave the Government two months to comply with his request to abolish the VHI’s exemption, or face court proceedings.

VIVAS chief executive Oliver Tattan said: “We are delighted to see that immediate action is being taken by Commissioner McCreevy to help address and correct this matter”.

The VHI, however, said the Government had already dealt with the matter. They agreed some months ago with Ms Harney to come into compliance by 2008, rather than the 2012 originally planned. But the risk equalisation element was also agreed where the VHI is compensated for looking after the bulk of older customers, who are the most expensive segment of the population.

They are working with a committee of civil servants from the Department of Finance and Health that was set up over the summer to discover how best to meet the solvency requirements.

Whether this will mean further VHI premium increases or not is unclear, but the company has had two good financial years and have set aside 27.1% of the €435 million required.

Fine Gael MEP Jim Higgins said the Government will have to ensure the VHI is not forced to increase its premiums to punitive levels as a result.

He added that the Minister for Health should not waste tax-payers money fighting the commission in the courts but should ensure that the VHI comes into compliance right away. “They cannot justify giving preferential treatment to one health care company and not to another,” he added.

A new VHI bill is going through the Oireachtas that means they will no longer have to apply to the minister for permission to increase their premiums or when they want to introduce new products.

The VHI’s derogation goes back to 1973 when Ireland joined the EU, but since the insurance company branched out into other products the commission says they no longer qualify.