Liam Twomey (Wexford, Fine Gael)

I had hoped this debate could have taken place later in the day so other Members could contribute their views, rather than just the main party spokespersons talking about the issue again.

I fully understand that risk equalisation is part of community rating, which is vital for the private health insurance market as it exists in this country at present. However, there is a total lack of clarity in what is taking place. I appreciate the Tánaiste will furnish us with the advice that she received to clarify how she made up her mind on this issue. The Minister for Health and Children is responsible for VHI and the HIA and the latter makes the decision on whether risk equalisation should be activated. Therefore, it is very important that there is transparency and accountability with regard to this, when the Minister has responsibility for both parties, one of which is making the decision and the other is affected by it.

What are we doing to improve competition? That is an issue that has been missed in these discussions. One of the major issues being discussed this week, outside the House, by people who have private health insurance is the future development of the health insurance market and how it will affect them. One of the certainties people know is they are facing far higher costs than those they have been exposed to in the recent past. Since 1997, VHI premiums have doubled for the average customer. Much of that increase can be accounted for by medical and ordinary inflation factors, for which allowances must be made. However, indications are that medical inflation will increase even more dramatically in the future, especially regarding diagnostics, where cost increases will be significant. This means private health insurance will become very expensive unless something changes in the next few years. What is the Oireachtas planning to do about this? What is the Minister for Health and Children planning to do regarding the future and competition in the market? If nothing is done, people will be squeezed out of the private health insurance market, especially elderly people, because they find it most difficult to make premium payments. Usually, it is people over 65 who need health insurance more than others. Yet, when people retire at 65, they lose the benefits of occupational private health insurance and must pay their own premiums. While one can say that with community rating, a person over 65 is paying the same premium as a person who is 35, if the costs get out of control, the person over 65 will simply not be able to afford the payment. This issue must be examined, apart from the issues of risk equalisation and community rating.

Hospital charges are as opaque, in some respects, as Government thinking. When this debate began, several people contacted me. They were not overly concerned with risk equalisation. They were more concerned about the bills they received from hospital, the bills that are sent to VHI. People said that it was almost impossible to figure out for what they were being charged. There is no clarity in the bills that are sent to VHI. It is easy for the hospitals to state the bills reflect their contract with VHI. However, when these bills are analysed and a comparison of the breakdown costs is made with other European countries — a comparison made much easier by the euro — the result is amazing. One can allow for the fact that different health services are cheaper to run. The Tánaiste has often made the point that it is much cheaper to look after people in the United Kingdom than here. Staff are paid differently and there are other variable cost factors at play. However, making a direct comparison of our hospital charges with those in other European countries including the United Kingdom is very enlightening. This is an issue that the Tánaiste should take up, namely the costs to VHI, because rising costs are driving up premiums, as reflected in the bills submitted by hospitals. Every subscriber should demand a detailed breakdown of his or her bill. Then we might see hospitals taking more control of their costs.

Risk equalisation was debated by the Joint Committee on Health and Children. In Australia, risk equalisation only kicks in with regard to people who are over 65. It does not apply to the whole market. As we also know from previous Oireachtas debates, the midpoint in terms of community rating is 40, that is, people who are under 40 are paying for those who are over that age. People in their 40s benefit very little but as they get older, the benefits from community rated private health insurance increase substantially. It is only for those over 65 that risk equalisation applies in Australia and so much of our private health insurance market is based on the Australian model. When VHI was established in 1957, it was based on the model that existed in Australia at that time. We have also followed many of the changes the Australians have made since then.

The Tánaiste should publish the report from the HIA to which she referred. We need clarity as to what is taking place. VHI can make a very strong case for itself, but at the same time, it controls 80% of the market. There is little or no competition in this market. An argument that has been used against BUPA is that while it only has a small percentage of the market, its profits are substantial, running into double-digit percentages. People are saying that BUPA is simply dovetailing VHI charges. Furthermore, when it comes to the charges and products offered by the companies, it is very difficult for customers to work out the benefits of each policy. One company, for example, has almost 30 different products. We should seek more streamlining in this area and this is part of the responsibility of Government. The Government can initiate public information campaigns to help people to cut through all the red tape and it can put pressure on the insurance companies to be more transparent for the benefit of customers so people know what they are buying.

The charge made by VHI against the new entrants to the market is that they are directing their marketing and advertising towards younger people so they can maximise their profits. Companies are making significant charges against each other and the State is getting embroiled in the case that BUPA is taking to the European Court. We need to have a much wider debate and I had hoped for that today.

The Tánaiste is correct about one thing, that is, a substantial number of people are affected by this, given the fact that 1.6 million to 2 million people in this country have some form of private health insurance. A substantial number of people will see costs increase. If the costs increase, the people who most need private health insurance, that is those on marginal incomes and the elderly, will find they cannot afford it. If costs to the markets increase dramatically, then there is no competition and the latter is important to make the system work. We must ask ourselves why, after so many years, there is still only one major new entrant in the market. The other entrant, VIVAS Health, only has 1% of the market and no other company is interested in entering the market. We should find out why that is the case. It is an extremely important issue that demands a much wider debate than that allowed for this morning.

I am concerned about risk equalisation, competition in the market, the costs of the products and the costs to the consumer in the future. I was hoping we could have a much wider debate on these issues in the House but perhaps we can do so at a later date.

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