Commission seeks timetable of reform for VHI

THE EUROPEAN Commission has asked the Government for a timetable for reforming the private health insurance market following a highly critical ruling by the European Court of Justice.

A letter, sent by the Commission to the Irish permanent representative in Brussels last month, also warns that the country could face financial penalties imposed by the Court of Justice if it failed to comply with the recent judgment.

In September, the Court of Justice found that Ireland had failed to meet its obligations under various European directives in relation to the health insurance market in Ireland.

The case, which was brought against Ireland by the EU Commission, centred on exemptions enjoyed by the VHI from certain EU rules on non-life insurance.

In essence, the case concerned the position of the VHI as not being subject to regulation or “authorisation” by the Central Bank in the same manner as its competitors.

The commission had taken the view that the VHI today differed considerably in terms of membership and activities from its configuration in 1973, when the exemptions were granted.

The court said when it was set up in 1957, the VHI was mandated to “make and carry out a scheme of voluntary health insurance for defraying . . . the cost to medical, surgical, hospital and other health services”.

However, under subsequent legislation in 1996, the company was given the right to provide other health- related services, and this was extended further in 1998 to allow it to act “as agent for an insurer in respect of the provision of insurance cover pursuant to an international healthcare plan”.

The court said that in 2001, the VHI obtained the right to carry out, among other things, “activities of an advisory or consultative nature”.

On foot of the judgment, the Government could now have to find significant sums – possibly running into hundreds of millions of euro – to invest in the financial reserves of the State-owned health insurer to allow it to be regulated by the Central Bank.

The commission, in its letter, said it wanted details within a month of the measures the Government intended to take, as well as a timetable for implementation.

Following the ruling, Minister for Health James Reilly said he was preparing “a comprehensive set of actions” and would be bringing proposals to Government shortly “on how best to address the issues arising from the judgment, as well as those affecting the private health insurance market as a whole”. This is now expected to take place in the next few weeks.

The calculation of any financial penalty under Article 260 of the Treaty on the Functioning of the European Union takes account of the seriousness of the infringement, having regard to the importance of the rules breached, and the impact of the infringement on general and particular interests, its duration and the member state’s ability to pay.