Oireachtas Joint and Select Committees
Wednesday, 25 November 2015
Committee on Health and Children: Select Sub-Committee on Health
Health Insurance (Amendment) Bill 2015: Committee Stage
We have a quorum. The Minister, being an ex officiomember of the committee, can be counted for the quorum. Apologies have been received from Deputy Caoimhghín Ó Caoláin.
I welcome the Minister for Health, Deputy Varadkar, and, from the Department of Health, Ms Patsy Carr, principal officer, and Ms Roisin Cahillane, assistant principal, to discuss the Committee Stage of the Health Insurance (Amendment) Bill 2015. The Bill was referred to the select sub-committee by the Dáil on 19 November. I invite the Minister to make his opening remarks.
As members are aware from the Second Stage debate, the main purpose of the Health Insurance (Amendment) Bill 2015 is to specify the amount of premium to be paid from the risk equalisation fund in respect of age, gender and level of cover from 1 March 2016 and to revise the stamp duty levy required to fund the risk equalisation credits for 2016. The Bill will set credits for the 60 to 64 age group at zero and increase the credits payable for those aged 65. The Bill also provides for an improvement in the health status measure under the scheme by expanding the setting in which a utilisation credit will be payable. It will now include day case admissions. This increases the support provided by the scheme to less healthy people. The Bill also provides for consequential amendments to the Stamp Duty Consolidation Act 1999 and a technical amendment to the Health Insurance Acts is also included.
I move amendment No. 1:
In page 4, between lines 13 and 14, to insert the following:
"Amendment of section 7A of Principal Act
3.Section 7A of the Principal Act is amended by the insertion of the following subsection after subsection (1):"(1A) Any insured person who has paid a relevant increase over a continuous period of 10 years shall have their age of entry adjusted to 35 if theycontinue to remain insured.".".
I submitted this amendment last year. Its seeks to limit the payment of lifetime community rating loading for ten years. Given that lifetime community rating is now in place, it could be argued that continual loading is unnecessary and that there should be a ten-year cut off. In view of the fact that the person has committed himself or herself to that timeframe, one would have thought he or she would make every effort to stay in private health insurance. Is there a logical reason to oppose it? We have had this debate on the bigger issue of universal health insurance and the abandonment of that policy. Clearly, lifetime community rating would not have been necessary if we had compulsory universal health insurance but we now have the option of taking out private health insurance. There is a need to incentive to ensure intergenerational support and solidarity and a vibrant private health insurance market to fund the elderly and the challenges that will have be faced in the years ahead because of the demographics, the changes in medical technologies and the costs that will be incurred.A continual penalty is unnecessary and I ask the Minister to look at that ten year limit.
I thank the Deputy for submitting the amendment. Section 7A of the principal Act refers to premiums which may be charged under health insurance contracts in certain circumstances and provides the legal basis for Statutory Instrument No. 312 of 2014 which allows for late entry loadings. Under lifetime community rating, late entry loadings apply and policies written after 1 May 2015 where the person is taking out health insurance for the first time and is aged 35 or over or where 93,000 people avoided loadings by taking out health insurance since January 2015 in the lead-up to its introduction. Lifetime community rating supports intergenerational solidarity but also rewards those who take out health insurance at a younger age with a lower price. The continued encouragement of younger people into health insurance is necessary in order to make health insurance affordable and accessible to more people.
The scheme has only been in operation for a relatively short period, a matter of months. Provision is made in the regulations for a review to be carried out by the independent regulator, the Health Insurance Authority, after April 2017. While the Deputy's proposal does have merit I would like to receive proper consideration in the context of that review of the legislation as a whole. Following the review, any actions deemed appropriate to further enhance the working of the scheme will be considered, therefore I do not propose to accept the amendment at this time.
That it will be reviewed is something I can accept. On the broader issue, the claim is that lifetime community rating is actively encouraging people to take out private health insurance. One would be forgiven for thinking the Minister was applauding himself or the decision to introduce lifetime community rating. However, a number of factors are at stake here. Thankfully, we have a growing economy and there are more people at work so more people are taking out private health insurance. The key question one has to ask is why people are taking out private health insurance. The biggest advertisement for private health insurance is the waiting lists in the public health system. That is what is encouraging people to take out private health insurance.
They are taking it out because of fear, anxiety and concern that they simply will not be able to access diagnostics or treatment in the public health system. The Minister cannot claim the policy is working because lifetime community rating has been brought in and the number of people now taking up private health insurance is increasing. He has to accept there is a major concern out there that people cannot, in a timely fashion, access basic treatments, appointments with consultants or diagnostics. The biggest recruiter of private health insurance are the appalling waiting lists in the public health system.
There should be continual review of the lifetime community rating policy. This amendment should be considered in order to reduce that burden on people after a ten-year period. While there is a weighting and encouragement for young people to take out insurance, the real encouragement is the fear of not being able to access the public health system. That is what is supporting the private health insurance market more than anything else.
The proposal the Deputy is making has a lot of merit and it is what is done in Australia, for example. However, it is obviously not necessary that we do it now because nobody has been paying the loading for a year, never mind ten years. I would like to review the Act in 2017, when it has been proposed to do that.
There are quite a number of reasons people are taking out health insurance, including a recovering economy at long last, increasing employment and increasing income, as well as the young adult discounts and the fact lifetime community rating is now in place. At the same time, I have no doubt what the Deputy says is true, namely, long waiting times are one of the things that encourage or drive people to take out health insurance. However, so long as we have those issues - we have had them for quite some time, for lots of reasons, particularly the capacity of our public health service - it is important we regulate health insurance to ensure that those who are older and those who have illnesses are not discriminated against.
I move amendment No. 2:
In page 8, between lines 29 and 30, to insert the following:
“(c) where a relevant contract is paid by instalments during the course of a policy year then the specified rate shall also be paid proportionately throughout said policy year.”.
One of the problems with the levy is the fact the full levy is payable the moment a person pays the first premium, even if they cancel it afterwards, but the credits are paid on a monthly basis. That is why we tabled the amendment. There is a concern in that the levy was previously going to Revenue. While I accept there would be challenges in terms of cash flow and administration, I decided I would table the amendment in order to raise the issue that people pay the levy upfront but the credits are paid in monthly instalments. I am looking for observations on why that is the case and whether there would be administrative difficulties in addressing it.
The Stamp Duties Consolidation Act 1999 sets out the provisions for the payment of stamp duties in Ireland. Section 125A of that Act provides for a levy payable by insurers on each health insurance policy written by them. The amount of this levy is reviewed annually and section 6 of the Bill amends section 125A of the Stamp Duties Consolidation Act by specifying the applicable stamp duty rates for, first, the period 1 January to 29 February 2016 and, second, the period 1 March 2016 onwards. Stamp duty for health insurance involves a four-rate structure depending on whether the policy written is for an adult or child, or for a non-advanced or advanced plan.
I am advised by the Department of Finance that the proposed amendment is not supported by the Revenue Commissioners as it would create an additional administrative burden with the reconciliation of the returns and payments submitted by health insurers, while not having any clear demonstrable benefit to consumers. Therefore, recognising the concerns expressed by the Department of Finance and the Revenue Commissioners, I am not in a position to accept the amendment.
As the Deputy knows, there are something like 340 different policies. The non-advanced ones have a very basic level of cover, usually only apply to existing public hospitals and cover no more than 66% of hospital charges. The advanced plans go further. The key difference is that the amount of stamp duty is higher for an advanced policy. The vast majority of people have advanced policies.
On a point referred to by the Minister in response to Deputy Mitchell O'Connor, we must accept there is a complete proliferation of health insurance policies. Perhaps it is because I am spokesperson on health, but we are daily getting calls, letters or e-mails from people who, when they avail of their private health insurance, are being informed they have to make a partial payment, which they previously would not have thought of.
There is something of a campaign to ask people to consider other insurance policy cover but, if they do take it out, they find there is a reduction in the cover. Surely the Health Insurance Authority has an obligation in this regard. While it has a great website and people can make comparisons on it, if we are to have a health insurance market, everyone should at least be able to understand what is being covered. It is impossible for a person to assess all the various policies that are out there and find the option that suits them most. Among some health insurers, and in some policies with all health insurers, there seems to be a reduction of cover for people when they most need it. For example, as people get older, it is more likely they will need cover in the area of ophthalmology and orthopaedics.
I would like to know if the Government Members are hearing of this level of concern because we certainly detect it is becoming a big issue. I would imagine it is primarily because people revisited their health insurance policies during the difficulties of the economic downturn, when, rather than dropping their health insurance completely, they may have been encouraged to change policy. I wonder whether they were given a full explanation of the cover they are entitled to. We now have many cases where people are paying for overnight stays in private hospitals or are being charged €350 or €400 for four hours of treatment, whereas, until recently, their health insurance would have covered that. Is the Government detecting this as an issue? If so, it really should be addressed so the health insurance market is seen to have absolute integrity in terms of how it promotes its products. If insurers do not promote them with that type of integrity, there should be some sanction but I do not believe there is such a sanction at the moment.
I agree with Deputy Kelleher. I recently rang my health insurance company to go through the policy I had in the past year.
If I become stroppy, say the premium has gone up too much and am about to hang up, they will say they can offer the same premium. Why is maternity cover pushed on women who are over the age where they require such cover? I acknowledge the Minister explained this previously. Perhaps I stand to be corrected but I understand men pay for this cover as well, which is ridiculous. Why would that be built into insurance cover? One has to become stroppy and with the last throw of the dice say one is leaving the company before they come up with an alternative policy that might be €400 or €500 cheaper. I do not expect the Minister to address that but I would say to the insurance companies that this is not good enough.
They also offer a corporate rate. They will ask whether the customer is in a union or a company and they are willing to offer a cheaper rate to keep the person on side and this is also not good enough.
This issue comes up. There are few things in the mix. We always have to be aware of competition legislation. This is a private industry and it is also a financial services industry. The Competition Authority, Central Bank and Health Insurance Authority all have a role. There is confusion given there are 300 or 400 plans. Some have an excess; some do not. People like the fact that they can opt for an excess because it reduces their premium if they are willing to pay the first couple of hundred euro. Usually, that is well flagged and sometimes items are not covered.
There are minimum benefits, which every plan has to cover. They are set down in law and the minimum benefits include maternity cover.
Yes. My health insurance policy covers maternity. The reason it does is community rating. The rating is designed to spread the burden of the cost across society and if it did not include maternity cover, then women would pay more for health insurance than men. We could do that but it would not be fair. That is one of the benefits that should be covered across society. The reverse could be applied as well. For example, why should women pay for prostate cover? There are swings and roundabouts. We could amend the minimum benefits to include, for example, orthopaedics. What might work is having a certain number of standard plans such as the old VHI A, B and C. People would at least know what they are and then the insurers could have variations on those plans. In my discussions with insurers, they point out that anything that reduces the number of plans available may increase costs overall and we would have to bear that in mind.
Everyone is entitled to the corporate rate such as the teacher's policy whether one is a teacher or not. Corporate rates have to be open to everyone even if they are not in that profession or a corporation, which is a bit odd but that is the way it is.