Jan O'Sullivan (Limerick East, Labour)

My issue is that, according to the VHI, the money transfer is not operating in a way that allows it to treat its older patients with the care they deserve. I unreservedly condemn the increases in charges as far too high. However, much of the blame lies at the Minister's door for not introducing a proper risk equalisation scheme. The VHI, in its annual report for 2009, stated that it would generate losses of €170 million in meeting the health care needs of older customers. In other words, as far back in 2009 the VHI was clearly signalling that there was a problem with having such a high share of older customers.

It is all very well for the Minister to say she intends to bring in measures that will move that around and other measures that will encourage younger people to take out insurance, but what is really needed is a one-tier system that is fair to everybody. We have the oddest system in the world in terms of the types of incentives it throws up, with great advantages for insured patients when it comes to hospital care and disincentives in regard to primary care. There is great talk about protecting older customers and the vulnerable, but the reality is that most older, vulnerable people do not have private health insurance and must go through the public system. We are quibbling with words when we talk about this.

The notion that consulting a website will solve the problem is entirely inadequate. I take the Minister's point that there are insurance plans of which people are not aware. An expert whose name I do not recall recently advised people to consider the corporate plans because they offer better value. Anybody who heard him may have taken his advice, but many older people do not have access to the Internet and are unsure how to proceed.

We are dealing with a complicated area and a cut-throat market. We saw that when representatives of the various health insurers attended a meeting of the Joint Committee on Health and Children in December 2009. One could cut the tension between VHI and the other insurers with a knife. They are, in my view, competing in a vicious way for customers. That should not be the case in regard to the provision of services for people who are ill.

The document submitted by the Health Insurance Authority to the committee stated, in regard to the future of the market: "In a community-rated market without comprehensive risk equalisation, insurers with lower risk profiles will be more profitable even if they are less efficient." It also stated: "Insurers that attract less healthy customers by meeting their needs will be penalised by incurring claim costs that are higher than a community-rated premium." The document also made the following observation:

A systemic issue arises for the market because risks are created for the long-term viability of insurers with less favourable risk profiles and consequently for the stability of the health insurance market as a whole. Regardless of its level of efficiency an insurer with a less favourable risk profile such as VHI Healthcare will be obliged either to increase its premiums or incur significant losses. [We got this warning back in 2009.] If it increases its premiums it is more likely to lose younger than older customers and its worsening risk profile may oblige it to increase premiums further, resulting in a cycle that could threaten the long-term viability of the insurer which would have consequences for the market as a whole. It is important to note that because competition is distorted an insurer would not incur such difficulties because it is less inefficient or because it has poor product. Such difficulties would result directly from its relatively disadvantageous risk profile.

Regarding the possible impact on public health services, the Health Insurance Authority document stated:

Insurers will have an incentive not to market health insurance to older and less healthy consumers and to sell products that do not cover treatments used by older people. If insurance products restrict cover for treatments required by older or less healthy people or if a significant number of these people allow their insurance to lapse then there will be a reduction in demand for private hospital services and a corresponding increase in demand for public hospital services.

This clearly sets out the difficulties of not having an effective risk equalisation system in place. The Minister herself has acknowledged that what is in place is an interim measure and that it does not accurately reflect the different balances that are needed in the market.

It is interesting that the Minister has told us some of what is in the Milliman report. I join Deputy Reilly in calling for the publication of that report. Redacted or not, it is important that the information is made public. There is not a great deal of detail in what the Minister has told us. However, I note the finding that the VHI has given limited focus to what it is paying hospitals for and to investing in ways to manage claims that could yield savings, with the report suggesting that savings of a minimum of 5% to 10% are achievable. The Minister acknowledged that the VHI would have to invest in more staff in order to do that, at additional cost.

I also note that the Milliman report's review of the VHI's experience of claims costs between 2007 and 2009 found there was a high trend for utilisation of day cases at private hospitals and substantial increases in average costs for inpatient procedures. I do not know whether this means the VHI is overusing private hospitals and whether services are more cheaply available in public hospitals. Perhaps we need to examine the current ruling that 20% of beds in public hospitals are designated for private patients. This is clearly designed to put insured patients into private rather than public provision, because the percentage of people with health insurance is far higher than 20%. This causes particular difficulties in areas such as Limerick where there is no private hospital. Patients have a right to a bed in a public hospital regardless of whether they are insured. That is distorting the use of public hospitals by patients who are insured.

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