Mr. Donal Clancy:

I thank the committee for having myself and my colleague, Dr. David Muiry, here today. We welcome the opportunity to discuss what we see as a critical part of the community in Irish society, that is, the health insurance sector.

First, I want to highlight, as I do in the second slide of my presentation, that we are the second largest health insurer in the market. Our ethos is to ensure that we provide essential care. By that we mean to provide added value and ensure that as many persons are in the community rated market as possible. We support community rating, as we do the principle of risk equalisation and the inter-generational solidarity that goes with it.

In the current market, no doubt since we met previously - we discussed it in previous sessions with the committee here - much of what my colleagues have already alluded to would support the contention that the price spiral continues. We are talking, in particular, about the charge for public hospital beds. It is the latest one. Initially we did not like it as it was supposed to raise €30 million.

The current position is that the independent assessors, the HIA and Deloitte, came up with a figure in the region of between €115 million and €130 million. That seems to be a factor of what was actually supposed to have been collected. No matter what way one balances or puts this, if one has to pay out that money, one has to collect it.

My colleagues alluded to tax relief at source and its impact. This involves another €170 million. These figures keep adding up. Irrespective of what we say here and how we dress it up, our customers and the community must ultimately pay for it.

There is no doubt but that the more who leave that community the more the remaining people must pay and the more they will be regarded as higher risk. The more people who leave the market, the greater the spiral. I will allude to that further.

There is also no doubt that reform is required to achieve our objective on universal health care. Much of what we have been talking about concerns that reform. This needs to be addressed now.

There are two critical points in our presentation that I would like to emphasise. First, we need young and healthy people to stay in the market so the overall community can be sustained. We must achieve this and we must have a system of reform for the future. Second, to incentivise the young and healthy to stay in the market, we must move towards a system whereby everything is equalised on a standard benefit. We need a standard set of benefits whereby everyone get equalised, not a set of benefits that incentivises those on a higher premium to pay the same levy as those on the lower end who can least afford it. There is no doubt about but that the current system, as implemented, is a crude one and needs to be reformed.

My presentation highlights these particular issues but many of them have arisen in previous conversations. I would like to highlight the movement in the market, in particular. People leaving the market is a substantial driver of the cost. In addition, there is an element that does not get highlighted, namely, the fact that people are downgrading. Time and again, people are going further down the line in respect of the average premium. I hear my colleagues talk about the percentages associated with the various age bands. With regard to the over-70s, our percentage is close enough to where we need to be with regard to the market ratio. We welcome all comers, no matter what their age. We want to participate in this market, have a community-rated system and be part of the community. However, those who are leaving are primarily between 18 and 30, or up to 40. From the age of 50 onwards, people are joining. This is the fundamental factor that needs to be addressed. Those over 50 are more than welcome to join but we need to keep those who are young and healthy in the market to sustain this trend. That is the purpose of the diagrams I have shown the members on the price spiral and the market implications.

This leads to the idea of reform and the associated technicalities. Let me summarise much of what has been said. We talk about lifetime community rating of some form. This relates to incentivising the young and healthy to stay in the market. We talk about having a different system to ensure that its effectiveness does not encourage inefficiencies. This is related to many of the cost initiatives that now exist. Very simply, it is sure that the cost initiatives that now exist will yield results. As the current monopoly player becomes more efficient and the market itself and funding get straightened out, there will be reforms. However, in parallel to effecting the funding resolution, one must solve the provider problem. The issue of providers, with the funding, gets resolved through universal health insurance. We advocate using a standard set of benefits.

Credit is due to those involved in the consultation processes that have taken place on most of the major issues in the past two years. Where consultation did not take place on the major issues, there has been discord, to put it mildly. The market has gone into shock and the Government has ended up forcing young, healthy people out of it. Market sustainability should be a primary concern. Risk equalisation, in its current form, needs to be reformed and there needs to be an ability to keep the young and healthy in the market.

With regard to what the Minister has done with public hospital beds, his stated intention of collecting only €30 million seems to be at variance with the facts. Three or four times more will be collected as matters currently stand. The burden of supporting the now-failing community-rating market will fall right back on the public system. Therefore, I strongly recommend and would like to be part of future systemic reform through genuine consultation