James Reilly (Dublin North, Fine Gael) | Oireachtas source

I thank all those who partook in the debate on the Bill. I will address some of the specific issues raised by contributors. The main purpose of this Bill is to specify the number of risk equalisation credits, in respect of age, gender and level of cover, that are payable to insurers from the risk equalisation fund from 1 March 2014 and to make consequential amendments to the Stamp Duties Consolidation Act 1999 to revise the stamp duty levy required to fund the risk equalisation credits for 2014. In addition, there are some technical amendments to the Health Insurance Acts.

This will have the effect of ensuring that risk equalisation continues to be as effective as possible in providing the necessary support to community rating while, at the same time, the scheme remains robust and transparent and promotes fair and open competition in the market. In particular, while improving the effectiveness of the risk equalisation scheme overall, these measures will make health insurance more affordable for older people by supporting community-rated premiums.

I will not go over the specific details of the Bill again, but it is clear there are serious challenges to the maintenance of a competitive and sustainable health insurance market. The last thing I want is for health insurance to become a luxury customers cannot afford. There is a number of options that can be explored to help address the decreasing number of persons holding private insurance. The proliferation of plans available on the market and the increasing segmentation of the market due to strategies adopted by the commercial providers are of growing concern to me. A potential measure to address this would be the implementation of rules relating to the maximum number of products that can be marketed by individual insurers. Clearly, the fact that there are 256-plus policies on the market is destined and designed to confuse people. As I said earlier, the Health Insurance Agency has a good website that people can use to help them make a good choice in regard to the insurance they require. People should shop around and consider whether they need to have their children on the same policy as themselves.

The introduction of a standard plan supported by effective risk equalisation and optional risk-rated additions could have a beneficial impact on the market. People mentioned lifetime community rating, which I intend to actively consider. Currently, somebody the same age as myself can get insured at the same cost, despite the fact I might have been insured for my entire life while that person only decided to become insured for the first time today. There is an issue there at which we should look.

There are a number of technical issues which have to be considered before any possible introduction of lifetime community rating, such as the age at which premium loading should commence and the rate at which the loading should apply. In this regard, I have instructed my officials to commence work immediately on assessing the full implications of introducing such a measure.

In seeking to address the current market decline in tandem with the possible introduction of lifetime community rating, there are other initiatives which can be examined to aid sustainability of the market. Another potential change relates to amending legislation to allow insurers the option to charge adults aged 18 to 29 at discounted adult rates. Currently, they can do this with students up to the age of 23. A number of other issues will be examined.

The impact of the risk equalisation scheme, which is the purpose of this Bill, is that stamp duty for advanced plans will increase by €49 for adults and €15 for children. However, this does not mean the cost of the plans will increase by these amounts. Everybody knows what is happening in the market. Why is it that Laya and Aviva have so few people over the ages of 70 and 80? They are gearing their market products to attract younger people. The reason they are doing that is that these people are more profitable. They make more money out of a 25, 30 or 40 year old than they make out of a 70 or 80 year old. If risk equalisation was working properly, one would expect that Laya, which has 22% of the market, would have 22% of people over the age of 80, but it does not. It has something like 3% or 6%. One would expect the same of the other companies, but that is not the case. How can that be if their marketing is fair, equitable and does not seek to segment? However, that is not the case. It is very clear what is going on, and that is what risk equalisation is about. Let us look at it from another point of view. If they did have an equitable share of the higher-risk older people, there would be no transfer of funds whatsoever between the insurers but, of course, that is not the case.

They do not have to increase the cost of their plans by the equivalent of the levy increase because they can easily absorb it from the profit margin they generate on policies for younger age groups.

Some media outlets have reported a doubling or more of insurance premia in recent years. I fully recognise that the increases of health insurance over the past few years at a time of financial crisis have made it hard for many households to bear but I would like to dispel myths about the increases. In 2008, the average premium paid for open membership insurance was €728 approximately before tax relief and this had increased to €1,048 gross in 2012, which represents a 44% increase. In the 12 months to the end of June 2013, the average premium paid was €1,095, which represents an increase of 59% since 2008. It has, therefore, not doubled or anything remotely like it but it is still difficult for families to deal with and nobody is denying that.

Deputy Creighton stated the levy is used to prop up the VHI. It clearly is not given it is used to subsidise older patients. The fact that 89% of people aged over 80 are insured with the company means it will receive the levy. The position is similar for people aged over 70 but if the other insurers were playing ball and taking these older people on, there would be no transfer of funds. The tax relief subsidy is a taxation matter that is put centrally but I must correct a misstatement because the Deputy is wrong. The administration costs of the VHI are lower than Laya Healthcare and Aviva Health and they are considerably lower than its American counterparts.

Why is the cost of health insurance increasing annually? Why do we passively accept medical inflation of 9% when most other sectors are experiencing deflation or inflation of 1% or 2%? There is no rationale for this. There has been no proper, aggressive attack on the base costs of health care. Two years ago, an individual made €1 million out of the VHI alone while last year an individual made €850,000 out of the company. That is before the moneys that may have been paid by the other insurers are taken into consideration and money paid in cheques and cash across the table in their practices. I do not care how good someone is because that level of remuneration is not sustainable in this country. It is clear that we have to benchmark what we pay and why we pay it and we must conduct a clinical audit which, astonishingly, has never been done. However, such an audit is being introduced by the VHI and this must be conducted by doctors. I do not mean any disrespect to nurses but a nurse cannot challenge a cardiologist, neurosurgeon or other specialist. It takes one of their peers to do that and there is little point in a cardiologist challenging a surgeon or vice versa. An audit would establish why the tests are being done, whether they are necessary and why there is such a volume of them.

I do not want to say anything that might upset Members and I am sorry people are losing their jobs in the Mater Private Hospital but there are reasons for that which do not necessarily relate to the reduction in the number of people who have health insurance. In the coming year we will have an opportunity when the consultants' contract and the private hospital contracts are up for renewal to drive down costs. We are paying the same rate for procedures that used to take two hours but now only take 20 minutes. This means that, in some cases, consultants can make between €4000,000 and €450,000 a year for a one-day week. That is not sustainable but none of this was tackled in the past. It will be tackled and Pat McLoughlin's group is examining this. This is not about consultant bashing. Excellent consultants work in the health services, some of whom work hard and do more work than they are contracted to in the public sector. However, there are others who do not and they are abusing the situation and they will be dealt with. Similarly, the cost issue has to be dealt with before we move to universal health insurance and we will deal with it. The average length of stay has increased in the private sector and it is reducing in the public sector. There is, therefore, a great deal of learning to be done on both sides. We can learn from each other and I am sure we will.

I have to take issue with the list of incidents Deputy Tóibín alleges happened. I am a doctor and nobody would stop breathing following a panic attack for 35 minutes. Anybody who stopped breathing for 35 minutes would not survive unless he or she was on life support.

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