Denis Naughten (Roscommon-South Leitrim, Independent) | Oireachtas source

You are a bit like a salesman at the moment, Acting Chairman, trying to encourage people to prolong the debate. I welcome the opportunity to speak on this legislation. As the officials will know, I have spoken in debates on every piece of legislation that has come to the House on private health insurance. I have raised concerns and predicted that we would go down this road unless urgent action was taken.

In the past four years we have gone from a situation where a majority of people in this country had private health insurance to having a minority of the population with private health insurance. Between 2008 and 2012, a total of 200,000 people have left the private health insurance industry in this country. That is 1,100 people every week who are giving up their private health insurance because they cannot afford it. It is a very difficult decision for families to make because they know how long they could have to wait in the public system to access health care and for that reason they are loth to abandon their private health insurance. However, they are left with no other choice because of the cost of servicing their mortgage, the fact that their incomes have been reduced significantly and because the cost of insurance premia have gone through the roof. As a result, only one in eight of the population between the age of 18 and 29 has private health insurance in this country. At the other end of the age profile, one in five of those over 60 years of age have private health insurance.

As I stated in the House previously, these trends clearly indicate that only those who have to rely on health insurance or are wealthy enough to remain within the health insurance system are doing so and unless immediate action is taken to curb the haemorrhage of young people from the health insurance system, it will collapse.

Earlier this year an issue arose in terms of how the insurance levy was structured in the private health insurance market. We now have a situation where in some policies the majority of the premium is used to cover the cost of the levy that is being put into the risk equalisation fund.

It is not appropriate that the majority of the money paid by people who take out health insurance goes into the risk equalisation fund instead of being used to pay for the cost of their health insurance. The situation is unsustainable and many families that are struggling to meet current health premia costs are being forced out of the system. That it is discouraging young people from joining will compound an already grave problem.

For the community rating system to work effectively, a higher number of young people and generally healthier age groups need to join to offset the higher cost of claims among older members. The Health Insurance Authority, HIA's figures indicate that elderly people's claims cost approximately eight times those of the claims of young adults. According to Professor Colm McCarthy's report, for every scheme member aged over 60 years in 2008, there were 2.21 members aged between 18 and 39 years. That level has fallen to 1.54 members. This statistic is unsustainable and cannot be continued into the long term. Ireland's population is growing older and living longer. This trend will have a profound effect on the viability of private health insurance in this country. We need to start encouraging young people into private health insurance quickly.

I have raised this issue previously and tabled an amendment on Committee Stage before Christmas to introduce lifetime community rating, which would have given an incentive to young people to join up for private health insurance. We also need to consider increasing tax relief for those aged under 35 years, including their children, to purchase private health insurance and reducing or removing the Government levy on the same age group, at least for one or two years until they get used to paying insurance premia.

I have considerable concerns about this Bill because of its double taxation approach. The decision to charge the full economic cost of a private bed in a public hospital means that taxpayers who are directly contributing to the public health system through their PRSI and health levies are being disenfranchised from any entitlement to the tax-subsidised public hospital service. The Minister has given no indication that he is going to remove the health levy or reduce the cost of PRSI. People will pay on the double for the same hospital bed. Under the Minister's logic, the taxpayer who contributes to funding our health service and who has private health insurance will lose all rights to a public hospital bed. This is the equivalent of telling motorists who pay road tax, VRT and tolls that they can only use public transport if they are willing to pay the full commercial cost of hiring the bus. This is unsustainable.

Insurers have claimed that the cost of premia will increase by up to 30%. The Minister has claimed that this is scaremongering. When speaking at the national health care conference in March, however, he claimed that introducing bed redesignation all at once, as he is now proposing, would break the industry and that the measure would be introduced on a phased basis over four or five years. The Minister has since changed his mind and no longer sees any danger in introducing this measure in the coming weeks. The Minister is entitled to change his views, but the public has a right to know the basis for that change. In the Seanad, the Minister spoke of his Department having actuarial figures that refuted the suggested increases. If so, he should publish them so that we could all see what they are.

The decreasing number of people with private health insurance will have a direct impact on the public health system, which is already experiencing extreme pressures and lengthy waiting lists. Between the end of December 2012 and the end of April 2013, the number of patients waiting for longer than six months for hospital treatment jumped from 6,038 to 11,348, an increase of 88%. This trend will accelerate if increased numbers exit private health insurance.

With private patients now being charged the full economic cost of beds in the public hospital system, the use of private hospitals will also decrease. This will impact on the public hospital waiting list.

The introduction of universal health insurance, which many of us believe is the way to go, in 2016 will be severely threatened by the increased reliance on the public health care system over the private system by a growing segment of the population. When the Dutch introduced a similar system, close to 90% of their population had some form of private health insurance.

Under this legislation, the Minister sets bed and procedure charges, thereby removing insurers' right to negotiate with individual public hospitals. This will do nothing to drive efficiencies or force hospitals to become more effective in the delivery of health care services. Hospitals will get paid irrespective of the level of service provided. This legislation will institutionalise inefficiencies, not tackle them. The knock-on effect will be that the consumers of private health insurance may not always get best value for money or services if insurers are not in a position to negotiate the best deal for them. For example, the CEO of VHI, Mr. John O'Dwyer, recently admitted that there were circumstances in which hospitals were charging private patients the full cost, some €1,000 per night, of a private bed in a public hospital despite the fact that they were spending the nights in question on trolleys. There is also a question mark over this legislation regarding EU competition rules.

Under the Bill, the Minister has designated that public hospitals must charge a set daily rate of €828 for private patient procedures regardless of whether these take ten minutes or ten hours to complete. This daily fee can be nearly three times higher than the equivalent cost negotiated by health insurers for the same procedures in private hospitals. For example, a breast biopsy in a private hospital costs approximately €280, but it will now cost €828 in a public hospital.

The Minister has rightly berated health insurers for not reducing their costs or cutting fees for procedures that used to take two hours but now only take 20 minutes. However, he is enshrining in law this disconnect between the actual cost of the procedure and the set cost determined by the HSE and the Department of Health, which may not reflect the true cost of the procedure.

For these reasons, I have significant concerns about what the Minister is doing in this legislation. It undermines his objective of driving efficiencies in the system and allowing hospital groups the independence to negotiate with private health insurers. It also undermines the goal of introducing universal health insurance, something that the Fine Gael and Labour parties campaigned on in advance of the last general election. As such, I will oppose the legislation.

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