Report will not be sole blueprint

AnalysisDevelopments over recent months mean that the Competition Authority report on the health insurance market published yesterday will not be the Government's sole blueprint for reform of the sector.

Government sources indicated last night that the recommendations of the authority would have to be considered alongside those in a separate report by the Health Insurance Authority, to be released later this month.

The Government's reform plans will also be influenced by the findings of a review group, headed by businessman Colm Barrington, which is examining the profitability of the health insurance sector.

The Barrington group will not report until mid-March, leaving the timeframe for any fundamental legislative changes very tight before the general election.

Some within Government will be relieved that the Competition Authority backed away from earlier indications that it would propose the break-up of the VHI.

Staff as well as the wider trade union movement had signalled they would oppose such a plan.

However, many recommendations regarding VHI's regulatory structure - such as ending the derogation governing its financial reserves and its obligation to seek ministerial approval for price increases - already form part of current Government thinking.

To some extent the proposal for relaxing the minimum benefit rules could be most interesting.

These set down the basic benefits which insurers must provide. And although the reasons for such rules are clear, the report says that they do hinder innovation in product design.

In essence, the report suggests companies should be allowed to offer cheaper plans which have restrictions on the number of hospitals or consultants to which the subscriber can go for treatment.

These are relatively common in the US but in Ireland the Government effectively set the minimum benchmark at the level of VHI's basic plans at the time.

The report suggests that "limited cover" plans could allow companies to opt out of covering private beds in public hospitals.

However private patient income generates millions for the Exchequer annually.

In addition, the attractiveness to investors of the Government's plans for new private hospitals to be built on public hospital sites could wane somewhat if there was no guarantee of cover by insurance companies.