Denis Naughten (Roscommon-South Leitrim, Independent) | Oireachtas source

I shall keep to questions. In his presentation, Mr. John O'Dwyer said risk equalisation was about 55% effective whereas the Department of Health was recently quoted as saying it was about 70% to 80% effective. Why is there a difference between his interpretation and that of the Department? Who is right? That has a significant impact on the overall cost of health insurance for families. He also said in his evidence that he does not agree with the two levy approach. Perhaps he would elaborate and explain why he does not agree with it. The reason we as legislators introduced the two levy approach was to try to put a safety net in place for young families who are carrying massive mortgages and massive child care bills while their household income is reducing on an annual basis. They cannot afford to stay in the system unless there is a two levy approach.

May I ask each of the insurers the actual financial impact if the Government goes ahead with its plan to have the full hospital charge passed on to insurers? What does that mean in real terms for families who are struggling?

Mr. John O'Dwyer made the point at our last hearing and also in the media that the VHI would be more profitable if it lost customers, which is bizarre, but I know where he is coming from. What efforts has the VHI made to encourage its members to take up equivalent policies with some of the other insurers? The Health Insurance Authority has made the point that people over the age of 60 years are buying policies from the VHI when they could get better value for the same coverage with some of the other insurers. Is any effort being made to encourage them to move to other insurers? Mr. O'Dwyer has also said he does not agree with the splitting of VHI. Given the huge age profile, would it not make sense to split VHI or hand over a cohort over the age of 60 to the other insurers to balance out the market?

In recent years staff numbers have increased at a time when the number of policyholders has decreased by about 30%. Will Mr. O'Dwyer please explain that? The average salary within VHI is about €52,000 while for other insurers it is about €12,000 less. Naturally, most are administration and call centre staff and I do not believe they are in receipt of that level of pay. Who is getting that level of pay in VHI? How many staff are on more than €100,000, because the public who are paying the policies cannot afford to continue to pay at that rate?

In respect of VHI accounts, it was pointed out recently that there is a liability of €28 million for providing subsidised health insurance for life for staff recruited prior to 2002. How many staff are involved? Is it just staff members? Are spouses covered? Are children covered and, if so, up to what age? Mr. O'Dwyer has made the point in his interviews that the VHI will continue to provide that cover as long as it can afford to do that. Does he believe, given the cost of insurance, that the company can continue to afford to pay while young families foot the bill for that perk? Between 2010 and 2011, the VHI has lost 3% of those over 60 years of age who had policies with the company. What impact has that had on overall claims cost?

Does that feed into the 5.6% figure relating to the reduction in claims costs or is it over and above it?

Turning to the issue of health status, as I stated when the legislation came before the House, I have huge concerns over the health status index as it is currently structured because it is based on bed occupancy. It is bad to see that in legislation and I have massive concerns about it. What efforts are being made within each insurer's organisation to ensure we can move as soon as possible from bed occupancy as an evaluation of health status? What sort of timeline is envisaged on that?

Deputy Kelleher mentioned the Milliman report. One of the issues highlighted in the report was length of stay. Some of the figures on that may be out of date, but in some examples the report showed that the length of stay for procedures under the VHI is five times that of some efficiently operated systems elsewhere. Where is the incentive for any insurer to try to get a person out of hospital as quickly as possible when it is written into law that the hospital will be paid more based on the length of stay of a patient in hospital? For example, a middle-aged Aviva patient is currently in University Hospital Galway, costing the insurer between €800 and €1,000 per day. That woman must remain in hospital for another three weeks because she is unable to get a piece of equipment which costs €4,000 that would allow her go home in two days time. The insurer, Aviva, has refused to pay the €4,000 and is prepared to allow that patient remain in hospital for the next three weeks, at a net minimum cost of €13,000. I believe the legislation we passed in the House a few months ago incentivises this practice, and this is unacceptable.

Mr. Clancy made the point that if someone moves mid-year from one policy to another, that person will have to pay the levy a second time. Will the other three insurers comment on whether that is also their understanding of the legislation? He also made the point that people at the lower end of the market will end up subsidising gold-plated health policies at the upper end of the market. I ask for the other insurers to comment on that also. In my view, that is unacceptable and cannot be allowed to happen no matter what system we have in place.