The Government has played down suggestions from the VHI that it could be privatised to realise hundreds of millions of euro for the Exchequer.
With the Minister for Health, Mr Martin, set to write to the State health insurer today informing it that he will not exercise his veto on its application for a 8.5 per cent price rise, the Opposition claimed the company was being fattened up in advance of a privatisation process.
But while the VHI has sought discussions with the Department of Health and Children on its commercial future, senior Government sources said Ministers were unlikely to sanction privatisation in the short or medium term.
Mr Martin said at a briefing yesterday that the question of the insurer's future ownership was on the agenda, but that had arisen because the VHI had sought the discussions.
Stating that the question of ownership was for the Cabinet to decide, he said: "It's an issue that needs to be considered very carefully." Ministers would address the matter in the autumn, Mr Martin added.
Yet while he acknowledged that a 1999 White Paper favoured moving in the direction of privatisation, he declined to offer a view as to whether the Government would back such a development.
The VHI, which yesterday reported profits of €36 million last year, has 1.6 million subscribers, representing 80 per cent of the private health insurance market. It has presented the privatisation option as an opportunity for the Government to raise up to €300 million for the Exchequer.
This would be a boon for the Government given the deterioration in the public finances, but senior sources in Government circles were adamant yesterday that any privatisation process was unlikely to begin soon.
While the VHI has returned to profits, these sources said that the rising trend in the cost of healthcare, and the volatility of that market generally, were such that the company's finances could not be guaranteed into the future.
The thinking goes that the Government would be obliged to step in with a rescue package in the event of a crisis, even if the company had transferred into the private sector. These concerns have been attributed to the Department of Finance by very senior sources outside the Department. They could not be independently verified yesterday by sources within the Department.
In addition, there is concern among the same sources that the development of risk equalisation, involving transfer payments between insurers to spread the claims costs of less healthy members, will require a significant bedding-down process.
The VHI price rise set to go ahead from September will increase the cost of the VHI's most popular insurance product, Plan B, by €36 per year. The bill for a family of two adults and two children would rise by €99.66. This follows an 18 per cent increase last year.
Claiming the Government was "fattening" the company for a sale, the Labour health spokeswoman, Ms Liz McManus, said it was inevitable that people would get squeezed out of the VHI at that level of increase.
