The inclusion of €63.5 million in the Government spending Estimates for the restructuring of the VHI was an error, the Department of Finance said yesterday. The allocation is to be withdrawn from the revised estimated volume, which will appear early next year.
The inclusion of the figure in "non-voted" capital health spending led to speculation that the health insurer was being given a substantial sum as a financial reserve to make it more attractive to potential buyers of the company. There has been sporadic speculation that the VHI might be privatised.
The company has 1.6 million policyholders, or about 80 per cent of the private health insurance market, and is one of Europe's top 15 health insurers.
However, both the Departments of Finance and Health said yesterday that the inclusion was an error. It arose from the fact that both the 2001 and 2002 Estimates included a contingency provision of €63.5 million for the VHI, which was never actually paid over.
This followed the 1999 White Paper on private health insurance, which favoured moving towards privatisation. The money is believed to have been included in 2001 and 2002 in case the Government decided to proceed with privatisation, but was removed from the 2003 Estimates when Government opinion turned against the idea in the short term.
Department of Health sources yesterday rejected the suggestion that the money was back in the Estimates because there was a "secret" plan to sell the VHI. When the Government allowed it to impose an 8.5 per cent increase in premiums during the summer, the Labour Party accused it of "fattening up" the company to make it more attractive to potential buyers.
However, health sources said that even if the Government had decided to go ahead with privatisation - which it hadn't - such a major move could never be completed during 2004, and so there would be no motive for such an allocation in the Estimates. Because the figure was included in "non-voted" capital spending - spending that does not have to be specifically approved by the Oireachtas - its removal from the Estimates does not affect the total capital spending on health for 2004, which will remain at €5.5 billion.