Liz McManus (Wicklow, Labour)

I thank the Ceann Comhairle and the Tánaiste for enabling this short and rather hurried debate. It would have been negligent on the part of the House if it had not afforded the proposal some scrutiny, albeit without proper preparation. This is an important issue precipitated by the lack of decision shown by the Tánaiste and Minister for Health and Children which has concerned and mystified many people. There is a perception that she has capitulated to the strong and over-the-top lobbying from one particular insurer.

This is not the first time risk equalisation has been put on the long finger but it is the first time it has been so starkly rejected. The Minister has clearly decided not to take the best expert advice available through the Health Insurance Authority. The likely effect is increased costs to the subscriber and a certain risk to older subscribers or people looking to take out health insurance who will now become the undesirables in the market. Many older people who are terrified of being left waiting for necessary health care are taking out health insurance to protect themselves and are now looking at their situation with some trepidation. The situation of the care of the elderly since the Tánaiste has taken office has been very disturbing for older people, both in terms of illegal charges and the scandal of conditions in private nursing homes. Now the safeguard which should be in place to protect them is not being provided by the Minister nor is it being explained in any coherent way.

Community rating has been a basic pillar of health insurance along with open enrolment and lifetime cover. The situation in this country is extraordinary in that 50% of the population is covered by health insurance and it is a significant feature of the health service. This is unlike other countries where people take out private health insurance, not because they want to protect themselves and to access care but because they desire the frills. In this country the health service is so defective, underdeveloped and poorly managed that people are protecting themselves by taking out health insurance to this extraordinary degree.

Risk equalisation is a necessary part of the way our health insurance system operates. It provides the necessary balance within the market and it is anti-competitive not to introduce it when it is required of us. This is not a pro-competition argument but it seems to be some kind of ideological position that the Minister for Health and Children has adopted to which I have listened to time and again at the Joint Committee on Health and Children. The Prorgressive Democrats spokesperson on the committee seems to think that anything is better than risk equalisation. It is as if she has a visceral repugnance to the idea of risk equalisation, even to the point where she has argued that older subscribers should be forced to move from their insurer of choice to another insurer. The idea being floated by the Progressive Democrats is that it would somehow be better to force patients and subscribers to move rather than to introduce a measure that has been tried and trusted elsewhere and is part of the way we have approached health insurance for a long time.

The net effect of the failure to introduce this measure when it is required or at least recommended by the authority, is the continuation of a windfall profit for BUPA of approximately €30 million. This is a British multinational which, as far as can be ascertained because it does not provide a great deal of information about its accounts, can ensure its massive Irish profits are transferred to Britain where its profits are not so good because of a different regime.

Risk equalisation was introduced in Ireland in 1996. BUPA entered the Irish market knowing the rules of the game. I find it very difficult to accept any validity in the argument when this is the case that BUPA started talking about pulling out of Ireland altogether. The initial blackmail was that it would pull up its roots and leave. The people working in its office in Fermoy must have been very disturbed by that statement but I suspect they saw it as a blackmail threat without any validity.

Risk equalisation exists for a good reason. It has been recommended by the Health Insurance Authority whose report to the Minister I ask her to publish. I do not accept that Mercer has a higher level of wisdom and knowledge. Mercer is a private consultancy firm advising the Minister and the House should be allowed see the report. The Health Insurance Authority was established by this House, the national Parliament, to act as the supreme body to ensure a decision made by a Minister was an informed one and that the very best advice was being given.

A competitive health insurance market with community rating and open enrolment would be unsustainable without risk equalisation. I know the Minister will say she believes in risk equalisation but it is very difficult to have any belief in that statement. She seems to be asking the House not to worry and to trust her judgment, but this is not really good enough because it has no substance and is ephemeral. One can only judge Ministers by their actions on difficult decisions and we are to understand that this is such a decision. However, it is not good enough to state that risk equalisation may be introduced at some point in the future. At that point there may be real problems created by this long delay. I do not have a problem with the delays in the past but the authority has now made a recommendation and the Minister persists in ignoring it.

I refer to the Minister's press release on the subject. Initially there was a much tighter requirement for risk equalisation and had this original requirement of 2% and more than 2% been maintained, then risk equalisation might have been recommended much earlier. Following consideration and consultation, changes were made which benefited BUPA quite considerably and also helped Vivas Health to set up. In the original legislation the timeframe for the introduction of risk equalisation was much shorter. The Minister has disregarded all this and history began when she took over. She is now taking advice from private consultants in the commercial arena and is disregarding an authority whose remit is to protect the common good.

I have problems with this policy and I challenge it. Even in her own terms of arguing that she stands for competition in the market, she is not able to sustain what she has done. Community rating is a distortion in the market, it is something we all understand and it already exists. Insurers with a large number of older subscribers are at a disadvantage because of community rating. It remains hidden in a monopoly because when there is a monopoly there is only one community. As a result of EU pressure, guidance and encouragement, we have a number of competitors in this area. Once there is community rating and competition, the antidote to the distortion created by community rating must be introduced, namely risk equalisation. For community rating to survive, there are only two situations that are viable. One is a monopoly supplier of health insurance, which will not occur unless the Minister persists on this route and it may well end up that we would have a new monopoly. The other possibility is competition among insurers plus a risk equalisation fund. Risk equalisation benefits any insurer. It is not that it would benefit the VHI, BUPA or VIVAS Health. It benefits any insurer that has a disproportionate number of older subscribers. BUPA has benefited in Australia for that reason. That is what this is all about and it is not the case that anybody has a problem with that.

Where there is community rating and competition but no risk equalisation fund, the market will always move to create a new monopoly. Community rating has survived only because VHI Healthcare has agreed to pass on to its members higher price increases that were warranted by reference to the community as a whole. This situation arose because VHI Healthcare has had a higher age profile of members than BUPA and now VIVAS Health. These higher prices have effectively financed the huge windfall profits for BUPA and this is a national scandal. That is what is happening. It is not that failure to introduce risk equalisation has no effect — significant profits are being generated to one insurer as a result of its preferential status.

BUPA has fought a tremendous fight on this and one could not take from its commitment to destroy and prevent risk equalisation from being introduced. It has been very focused and effective. According to the Minister's public statement in January 2003, Irish authorities formally notified the EU Commission of the risk equalisation scheme. This notification was on foot of a complaint made by BUPA Ireland to the EU Commission that risk equalisation constituted an illegal State aid. The Directorate General for competition at the EU Commission notified the Irish authorities in May 2003 that it decided not to raise objections to the scheme on State aid grounds. It recognised the importance of risk equalisation. It does not see this as an interference in the market but sees it for what it is, namely, a measure to rebalance a distortion in the market that arises because of community rating, which is a protection for the common good, something which is universally subscribed to and supported across this House. The EU Commission understands the importance of risk equalisation. That is further evidence that this issue is not being dealt with fairly and properly in the interests of the common good and the individual subscriber.

The Minister has used the argument about the VHI not needing to have reserves. The EU Commission does not have a problem with that.

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