Alex White (Dublin South, Labour) | Oireachtas source

On behalf of the Minister, I express my gratitude for the wide-ranging support from all sides of the House for this Bill, which clearly acknowledges the necessity for the introduction of a permanent risk equalisation scheme.

Let me address Deputy Jerry Buttimer's specific point on section 3 of the Bill and his concerns regarding paragraph (iv), which proposes an amendment to the principal Act. I reassure him that the intent is the opposite to what might be suggested on first reading. The legislation lists a number of circumstances that are to be identified as a basis upon which one cannot discriminate, rather than a basis on which one can do so. It refers to:

(a) the present use of, or likely future use of, hospital services by the person,

(b) the sexual orientation of the person, and

(c) the suffering or prospective suffering of the person from a chronic illness …

I noted the contributions of a number of Deputies on universal health insurance, hospital charges and health care costs, and I will address some of these in the course of my contribution.

The main objective of the Bill is to provide for a permanent, robust system of risk equalisation. Its purpose is to ensure the burden of the cost of health services will be shared by all insured persons by providing for a cost subsidy between the more healthy and less healthy and between the young and old. This reflects the principle of social solidarity.

The Bill seeks to strengthen and maintain stability in the private health insurance market and the new risk equalisation scheme, RES, will allow for a greater number of risk factors than the existing interim scheme, including a measure of health status. One criticism of the interim scheme, which has been in place since 2009 and will finish on 31 December next, was that younger people taking out products that provided benefits below the standard level were potentially cross-subsidising standard level benefits taken out by older people.

The new scheme, RES 2013, will provide for differentiated levels of stamp duty and health credits between higher level or advanced cover, and lower level or non-advanced cover, with a view to addressing this point. The improved clarity arising from this development has been broadly supported by insurers.

The aim of reforming the health area across the board is to deliver a single tier health service which will ensure equal access to care based on a person's need and not on their income. That is at the heart of the commitments this Government has given and that are reflected in the programme for Government. This permanent risk equalisation scheme for the private health insurance market is an essential element or critical stepping stone to achieving the programme for Government commitment to universal health insurance.

The Government is embarking on a major reform programme for the health service, the aim of which is to deliver a single-tier health system supported by universal health insurance. The system will be based on a multi-payer model and will be underpinned by the principles of social solidarity with access based on need and not on ability to pay. Under universal health insurance, everyone will be insured for a standard package of curative services. A new insurance fund will subsidise or pay insurance premia for those who qualify for a subsidy.

The risk equalisation scheme now proposed by the Minister is in keeping with the Government's commitment to move to a system of universal health insurance, particularly in the context of its approach to payments and disbursements. In designing the UHI model, there is a need to ensure it meets the needs of Irish citizens and that it achieves the best outcomes for patients in a manner that is cost efficient and financially sustainable. To inform policy development in this regard, the Department of Health is looking at other countries that have developed health insurance-based funding models, including the Netherlands and Germany, and examining international best practice. Ultimately, the Government is committed to introducing an Irish model of universal health insurance that best fits the Irish system.

An important document concerning the reform programme for the health service entitled, Future Health: A Strategic Framework for Reform of the Health Service 2012 - 2015, is being published by the Minister this afternoon. It sets out the main health care reforms that will be introduced in the coming years, as key building blocks for the introduction of universal health insurance.

Under the current legal framework, private inpatients who occupy public beds in public hospitals are not levied the daily maintenance charge, which ranges from €586 to €1,046 in most public hospitals. The Comptroller and Auditor General reported in 2010 that 45% of inpatients treated privately by their consultants were not charged for their maintenance costs because they were not occupying designated private beds in public hospitals.

As part of budget 2012, the Minister announced his intention to bring forward legislation to provide for the charging of all private patients in public hospitals, irrespective of whether they occupied a public or a private bed. However, conscious of the significant potential cost implications for private health insurers, the Minister indicated that he would be prepared to postpone implementation of the legislation until 2013 provided that the funds targeted in budget 2012 for the current year could be raised through a system of improved cash flow. Such a system has been agreed in principle, with the legal agreements being finalised with health insurers at present.

With regard to progressing the legislation in 2013, the Minister is considering a number of policy issues and implications in advance of bringing the matter to Government. Legislative proposals will be developed on foot of a Government decision at that stage.

The question of charges is a budgetary matter on which no decisions have been taken yet. With regard to an assertion made previously during the debate that charging the full economic cost is akin to an overdraft, it is worth noting that an equitable regime of charges based on the cost of services delivered will be required in the context of introducing Money Follows the Patient and, ultimately, moving to universal health insurance. The Minister shares Deputies' concerns about rising public health care costs, as I do, and would like to assure the House of the way reform of hospital funding will help to address that. The following items will be of interest to the House.

The programme for Government commits to introducing a prospective based money follows the patient, MFTP, funding system whereby each patient would be funded on an individual basis. Under the MFTP system, hospitals will be paid for the actual care they deliver rather than being in receipt of a historical block grant. A number of initiatives are already in place in the acute hospital system in preparation for a prospective MFTP model. These include a patient level costing project in the Health Service Executive which tracks resources actually used by individual patients from the time of admission to hospital until time of discharge. In addition, the HSE has implemented a prospective funding pilot project for certain elective orthopaedic procedures at selected sites.

A hospital financing subgroup, established under the auspices of the UHI implementation group, has prepared draft policy and implementation proposals, and these are currently being considered by the UHI implementation group. These proposals represent an important first step in the process to transform the health care funding system. Therefore, it is truly patient-centred, value-focused and thus supportive of wider health care objectives.

Without a robust risk equalisation scheme there are potentially serious consequences for the stability of the market and the sustainability of registered undertakings. Registered undertakings with the worst risk profiles either charge higher premiums or incur heavy losses. The problem can then be exacerbated as younger customers switch to other registered undertakings where they may find more attractive plans.

An outcome of this imbalance would be that an insurer with a significantly riskier portfolio becomes unsustainable. This is likely to result in the destabilisation of the market, challenging the long-term sustainability of all registered undertakings with serious potential consequences for consumers as the next insurer with the disadvantageous risk profile then becomes vulnerable. The introduction of a permanent RES will, therefore, assist in maintaining a stable and sustainable health insurance market.

Developments in the private health insurance market will continue to be kept under review by the Department of Health. In addition, the Health Insurance Authority monitors the health insurance market and advises the Minister, either at his direct request or on its own initiative, on matters relating to health insurance.

I am very aware, as is the Minister, that health insurance is becoming harder to afford, in particular for older people, as insurers increasingly tailor their insurance plans towards younger, healthier customers. That point was made repeatedly in the course of the debate. However, the Government is committed to keeping down the cost of health insurance so that it is affordable for as many people as possible.

The issue of addressing costs has been raised with insurers at a number of levels. The Minister raised the issue with health insurers individually. The Department continues to focus on the need for VHI, for example, to address its costs both in terms of the underlying cost of procedures and treatments for which it pays and also in terms of volume. VHI has commissioned consultants Milliman to carry out an external review of its claims. The review is nearing completion and will look at the opportunities and costs involved in possible reductions in utilisation that can be achieved by implementing appropriate utilisation management approaches.

The Minister has no role to play in the day to day activities of VHI. As he told the House last evening, he has raised the issue of costs with all insurers on a number of occasions and is very focused on maintaining pressure on the system to drive down costs wherever possible. A number of initiatives have been taken in that regard. VHI, for example, is focused on cost management as a priority for the organisation and is engaged in many cost management initiatives including hospital audits, utilisation reviews and its special investigations unit.

VHI has recently agreed new contracts with private hospitals which provide for savings in specific areas, with a particular emphasis on productivity. Its new contract with consultants, which commenced on 1 July and will run for two years, aims to increase the speed of patients through hospitals and ultimately to reduce length of stay by paying a declining rate of reimbursement for delays in consultations. The target set by VHI is an average two days reduction in length of stay for medical patients. In addition, VHI will adopt the new reporting arrangements on radiology and pathology to be applied in the public system currently being developed by the national quality assurance programme.

Deputy Jerry Buttimer made the point that it is appropriate and correct that people should be advised to, as it were, shop around and do the best they can to get the best value they can achieve for the health insurance plan that best suits their end but it is not always as straightforward as that simple statement might suggest. I agree with the Deputy in that regard, but it should be recalled that consumers have a legal right to switch between or within insurers to get better value and to reduce their premium costs.

The Health Insurance Authority is the statutory regulator of the private health insurance market and it provides information to consumers regarding their rights and also on health insurance plans and benefits. The HIA plays an important role for customers, both in ensuring that they have accurate information and in enforcing the implementation of the law protecting consumers in regard to health insurance. The HIA's website has a useful plan comparison tool which assists in finding suitable and competitive health insurance plans.

A number of Deputies, Deputy SEan Fleming in particular, raised issues regarding the Health Insurance Authority. It was established on 1 February 2001 under the Health Insurance Act 1994. It is a statutory independent regulator of the private health insurance market in Ireland and also provides information for consumers on health insurance plans and benefits and on their rights, as I have indicated. The authority's role within the health insurance market has changed considerably in recent years, with an increased workload since its establishment due to the changing nature of the private health insurance market.

It has been suggested in the past that the Health Insurance Authority, HIA, should be absorbed by the Financial Regulator and the Central Bank. More recently, under the Government's agency rationalisation programme, the future of the authority is being considered in the context of the proposed move to a system of universal health care. The future regulatory environment in that regard will be extremely important. Under the programme for Government, it is proposed to establish a hospital insurance fund which will, among other functions, oversee a strong and reformed system of community rating and risk equalisation. As these functions are fulfilled by the HIA, it appears the fund would absorb them. Based on the programme for Government, it would seem logical for the HIA to be subsumed into a future health insurance fund, given its valuable experience of risk equalisation and community rating. This will be considered as part of the implementation of a universal health insurance system.

A query was raised by Deputy Twomey on the rationale for a hospital bed utilisation charge. This risk equalisation scheme will increase the factors to be risk adjusted to include a measure of health status. Where available, pharmaceutical or diagnostic cost groups are used internationally as an indicator of chronic illness and attract risk equalisation payments accordingly. While these data are not currently available in Ireland to the level of detail required, the Minister is committed to developing proposals to risk adjust based on a measure of chronic illness when the necessary data are to hand. This is an area in which it is considered that the market operators can be of particular assistance. Once the required data are gathered, it is intended to progress work on developing a usable risk adjustment measure for health status. In the meantime, the Bill provides for resource usage to be used as a proxy for health status as a risk factor. Resource usage data are readily available and easy to verify and used in other countries to risk adjust.

An amendment will be brought forward on Committee Stage which will provide that, in respect of policies effected from 31 March 2013, a hospital bed utilisation credit will be payable from the risk equalisation fund in respect of each overnight stay in a hospital bed in private hospital accommodation by an insured person where the health insurance cover of his or her contract covers that hospital stay. The rate which will be proposed on Committee Stage will be set at a level so as not to encourage inefficiencies in any way.

I thank Deputies who contributed to the debate. This important legislation deals with the specific issue of the requirement to have a permanent risk equalisation scheme effective from 1 January 2013 to replace the existing interim scheme. It is essential, in the interests of both the common good and societal and intergenerational solidarity, that the permanent scheme is fully operational and functioning soundly from 1 January next. Without a robust risk equalisation scheme, there are clear negative implications for older or less healthy consumers. In addition, there are potentially serious consequences for the stability of the market and the sustainability of insurers. The Government is fully satisfied of the requirement to provide for a permanent risk equalisation scheme along the proposed lines. The introduction of the Bill fulfils the commitment made in the programme for Government to introduce a system of risk equalisation for the private health insurance market, as we move to develop a new system of universal health insurance.

See this speech in context