Why we should privatise the VHI

Sale could raise €1bn for investment in our health services

Warren Buffett, one of the world’s shrewdest investors, has loaned funds to VHI, indicating his confidence in it

Warren Buffett, one of the world’s shrewdest investors, has loaned funds to VHI, indicating his confidence in it

 

Not for the first time Irish healthcare is in a complex place: massive numbers of people on trolleys in public hospitals, the biggest number ever in the first four months of this year. Waiting lists are shockingly high, and getting more shocking for some ailments.

Available resources are diminishing, with Exchequer returns faltering and Brexit clouds gathering, pushing out the chances of increases in public spending that would help healthcare.

Some are hoping there will be an upturn next month in Exchequer returns, and that the picture will change. But those on waiting lists can’t be made dependent on the uncertainty of the international economic environment.

Fairness requires some kind of a solution within our own control, and that could be done quickly.

The VHI has been one of the quiet success stories of the Irish semi-State sector. Not long back it was in great difficulty – it didn’t meet the standards for regulation by the Central Bank, it didn’t hold adequate reserves for a company in the insurance business. Its capital position was in jeopardy.

In the past five years it has turned itself around. It now has a strong capital position, it is authorised and supervised by the Central Bank like other insurance businesses, and it is run successfully and commercially.

Warren Buffett, one of the world’s shrewdest investors, has loaned funds to VHI, indicating his confidence in the business.

Private patients

And while all health insurance companies have had increases, some of this has been spawned by the State’s own practice of charging private patients on the double in public hospitals, adding considerable percentages to premiums. The level of premium increase in some instances has been less at the VHI than other non-State owned health insurance companies, but this is not a factor of ownership, it is a factor of competition and the State business being tightly run.

Once competition came to the telecoms sector and regulators had to approve pricing, there was no more reason for the government owning a telecommunications company.

There is no strategic reason for the State to own a health insurance company anymore. The Central Bank, competition and regulation are more important than ownership for health insurance customers.

The VHI or part of it could be sold, and it would be only right and proper that the proceeds should be ring-fenced for health spending.

If the VHI was to be sold in its current very healthy position it could garner the State as much as €1 billion. This could produce badly needed resources, especially for the stubbornly growing patient waiting lists.

Another set of bad patient waiting lists has just come out indicating resources should come fast if the pain of those queueing is to be eased.

Would patients prefer to be the owner of an asset that they don’t need to own or there to be the resources to actually change or save some of their lives? I think the answer is obvious.

Inroads

The fastest way to make inroads into those shocking waiting lists is through having the resources to tackle them, and utilising all the health facilities of the State, private and public, through the summer and autumn to make headway.

There are also other demands in the healthcare area that would benefit from the boost from VHI.

The upcoming report of the Future of Healthcare Committee is going to recommend a cash injection for the health service over the next 10 years. One call is going to be to find a substitute for the €650 million that private patients pay to public hospitals for treatment so that the two systems of care can be disentangled.

There are other urgent health calls on the public purse too: the new children’s hospital, hospital pay, medical redress, the list is endless.

All these point to the need for a new source of one-off funds for healthcare. The Government should bite the bullet and start the process quickly to bring in resources from the VHI. If the business passes the Buffett test, it will fly in a sale.

Its founding fathers decades ago established VHI for community good. The equivalent of that community good now is having the resources to adequately provide for our people in pain. Quick outcomes to the misery of those on waiting lists would justify such a move, and make whatever Minister for Health did it a hero.

Simon Nugent is director of the Private Hospitals Association

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