The Minister for Health, Mr Cowen, has rejected any suggestion that patients using the public health system would be disadvantaged because of the proposed £u50 million investment of public money in the VHI.
Speaking at the publication of the Government's White Paper on private health insurance, Mr Cowen said: "The public-private mix is a distinctive feature of the Irish healthcare system which brings with it clear advantages but also a responsibility to ensure an equitable distribution of publicly-funded services as between public and private patients."
He said "public funds go farther because those who have the means to do so largely fund their own care". He said evidence of the Government's continued commitment to the public health service would be evident in the forthcoming National Development Plan.
Mr Cowen said the White Paper marked "the first comprehensive statement of policy since health insurance legislation was introduced more than 40 years ago". The review, "which entailed wide consultation with both public and private healthcare interests", was long overdue.
Legislation to transform the VHI into a commercial semi-state company would be ready within 18 months, he said, and the Government "will legislate for further changes, including the possibility of privatisation in due course."
Mr Cowen said the Government would invest "in the order of £50 million" of public money in the VHI to make the company solvent. He said the investment was "subject to compliance with EU guidelines on State aid and the relevant EU Directorate has been made aware of our intentions in this matter".
It was the Government's wish "to promote the growth of more insurance-based services and choice to the consumers across the wider spectrum of healthcare". He said "every effort must be made to ensure maximum cost-effectiveness and efficacy in the use of resources if health insurance premiums are to be kept within affordable limits".
The Government, Mr Cowen said, "is committed to the continued operation of the system on a community-rated and open-enrolment basis.
"These core principles are essential to confidence in the private health insurance system and to the provision of affordable cover to the elderly and the ill".
He said the community rating system would enhance "the financial stability of the system and provide greater equity within the insured population".
"Community rating is heavily reliant on people opting to become insured at a young age, on the expectation that they will be net contributors to the system over a reasonable period. The White Paper provides for community rating to be strengthened by the introduction of premiums related to age of entry. Accordingly, in the future, those who join health insurance at age 35 or over will be liable to carry an extra premium charge. However, once they have joined, they will retain the community rate appropriate to their age at entry and will not be subject to premium increases because they are getting older," the Minister said.
Mr Cowen accepted that risk equalisation "has been the most controversial and closely scrutinised aspect of the White Paper". He said it had been the view of successive governments, "expressed in legislation in 1994 and under regulations in 1996, that risk equalisation would be a feature of our market, as it is in other systems where insurers are obliged to take on all-comers and cannot risk-rate premia".