Guarantee to Ireland’s VHI must be abolished
By Sophie Mosca | Thursday 26 July 2012
State aid received by the Irish Voluntary Health Insurance Board (VHI) has to be stopped, ruled the European Commission, on 25 July. The EU executive found that the state guarantee granted to this public body is incompatible with the Union’s state aid rules because it introduces an undue financial advantage. By virtue of the VHI statute, it cannot be forced into bankruptcy and is thus able to obtain preferential loans compared with the lending terms available to its competitors. The state also bears its credit or commercial risks. These undue advantages should have been abolished after the Irish medical insurance market was opened up to competition in 1994.
“A level playing field on the Irish market for private medical insurance can only exist if all operators compete on equal market terms. The removal of the unlimited state guarantee to the Voluntary Health Insurance Board is essential to ensure that competition on this market takes place on the operators’ own merits,” commented Competition Commissioner Joaquin Almunia.
The Commission has therefore asked Dublin to progressively transform one or more VHI subsidiaries into private limited companies, which will take over all of VHI’s economic activities by 31 December 2013 at the latest and will be governed by common Irish company law. It also requests the removal of the unlimited guarantee by 31 December 2013.