Thursday, 26 April 2007
Risk Equalisation (Amendment) Scheme 2007: Motion
That DÃ¡il Ãireann approves the following regulations in draft:
Risk Equalisation (Amendment) Scheme, 2007,
copies of which have been laid in draft form before DÃ¡il Ãireann on 24 April 2007.
The changes being made in the scheme before the House give effect in the risk equalisation scheme to the legislation that was enacted last February to amend the Health Insurance Acts to protect our system of community rating. This country's policy of community rating means that no health insurer can set prices in a way that means people are unable to afford their premiums as they get older and more likely to need medical care. This fair and equitable approach eliminates the possibility of discrimination on the basis of age and health status.
Risk equalisation is a necessary feature in a community rated market. Prior to the enactment of the Health Insurance (Amendment) Act 2007, legislation allowed new entrants to the market, such as VIVAS Health, to avail of a three-year exemption from the obligation to make risk equalisation payments. The exemption was intended to give time to bona fide new entrants to establish themselves and build market share. When the original legislation was enacted, the Oireachtas intended that the exemption should be confined to new entrants which were coming into the market to build market share from scratch, using normal business practices. The risk equalisation scheme provided for such an exemption for new market entrants. The Government considers that the exemption has to be removed to protect the operation of the community rated market, which means that related changes have to made to the risk equalisation scheme. Most of the changes set out in the explanatory memorandum are of a technical nature and reflect the legislative changes which have been made. As returns are made on a six-monthly basis, covering January to June and July to December of each year, it is necessary to make the changes before the next returns are compiled and returned to the Health Insurance Authority at the end of July.
I will briefly outline some of the main changes which are being made. The Government is satisfied that the reduction is appropriate, having regard to the removal of the exemption; its receipt of the reports on the market; its views on the exemption; the Health Insurance Authority's report, which proposed an extension of the phasing process at the end of the three-year exemption period for a further three years; the need to ensure there is proportionality in the scheme; and the decision to reduce the payments that arise to 80% of the current level.
The zero sum adjustment, a technical mathematical balancing of moneys within the scheme, is also being amended. While it was a minor feature in recent criticisms of the scheme, the opportunity is being taken to amend the formula so that payments by any contributors will be clearly based on their own claims costs.
The amendments in article 11(3) and related changes to the formula and data to be submitted are designed to ensure that reported claims data remain consistent in circumstances where an undertaking is running down its business. Some other minor technical amendments are addressed in the explanatory memorandum.
A primary intention of the amended scheme is to balance the twin objectives of promoting competition in the health insurance market whilst at the same time protecting the integrity of community rating, both of which are to the benefit of the consumer. The Government is satisfied that the changes being made to the scheme are in the best interests of consumers and the development of the market.
This measure is another indication of the Government's failure. It has failed to deliver a consultants' contract, the Minister for Health and Children has spent the past month demonising nurses and, following the terrible recent tragedy in County Wexford, members of the Garda are expected to double as social workers at weekends. Neither the Minister nor the Minister of State has an understanding of the crisis in the mental health services. I am surprised the Minister of State has not issued a statement on this matter. One cannot expect general practitioners and ambulance drivers to do the job of a senior social worker and one would never contemplate not making an ambulance or a GP available. The Government, through its failure to resource the Health Service Executive properly, contributed to what happened in County Wexford.
The private insurance patient is being told to vote for Fianna FÃ¡il or the Progressive Democrats. This is another opportunity to give patients a harsh dose of PD medicine. It is clear from the Minister's press statement that the purpose of this measure is to privatise the VHI. It has nothing to do with mutualisation. That is a red herring intended to win over the VHI's 1.2 million subscribers. Mr. SeÃ¡n Quinn places a value of â¬1 billion on the VHI. The company is owned by the State. If its status is changed, will it be loaded with a loan of â¬1 billion? How will the mutualised VHI raise a loan of â¬100 million so that its reserves can reach the percentage point expected by law when its derogation is removed within 18 months? How will the VHI repay that loan? The changes made by the Government to risk equalisation mean that the company's income will decrease. It will be necessary to raise private health insurance premiums, but the Government does not have the honesty to admit that people who have private health insurance are getting a raw deal. The Government does not know what it is doing.
Fine Gael accepts the need to change risk equalisation because competition and community rating are sacrosanct. The Government has done a U-turn from the nonsense it spouted when BUPA left the Irish market. It is now responding to some of the issues which drove BUPA out of the market. At that time the Government insisted that risk equalisation was perfect, did not need to be altered and would remain. It now admits that problems attach to risk equalisation as it is applied in Ireland. A measure such as this should not be taken on the eve of the fall of a Government. It should be properly discussed.
Not only is the Government falling behind with regard to risk equalisation, it is also altering community rating. Four months ago the Government promised that it would never change community rating. It was supposed to be sacrosanct. Now it is to be changed. I can understand and accept that younger people should pay lower premiums. However, the introduction of a yellow pack plan with community rating will mean that those who buy other plans, which will not have community rating, will be ripped off. Speaking on radio this morning, the Minister claimed she is looking after the interests of the ordinary patient. This is not the case. The ordinary patient will get the rawest deal of all.
The Minister of State claims to be pro-consumer. Nothing in this scheme is pro-consumer. The Minister, in her press statement, promised that the Health Insurance Authority will "initiate a process of consultation with the health insurance industry and private health care providers on defining the level of health insurance which should be subject to community rating". Her press statement contains no reference to consumer representation. The Government has no intention of including consumers in the choices to be made on their behalf by the Government and the private health insurance market, whose motivation is totally different from that of consumers.
The recent report by the Barrington group on the health insurance market acknowledges some uncertainty about private health insurance among policy makers. The report says politicians and civil servants have concerns about it. The group found this uncertainty particularly surprising in the context of the Government's strong support for the development of private hospitals. The report goes on to refer to universal health insurance and other changes in the private health insurance market.
Deputies are allowed only five minutes to discuss this important matter. The Government is deceiving private health insurance patients. Their premiums will be increased and will increase even futher in the next couple of years. The Government will not engage in a proper debate with those private patients. It will rip them off as it has ripped off everyone else. The Government will get its warning in a few weeks time.
I protest at the way this debate has been arranged. The Government did not intend to subject these changes to any debate whatsoever. The overweening arrogance of the members of the Government is such that they thought they could pass this measure without any debate. We have had a miserly concession of five minutes speaking time for each Deputy, which is not sufficient to deal with this very complex issue.
More than 52% of the population have health insurance, even though everyone has an entitlement to health care. The Minister for Health and Children continues to disregard this point when she talks about moving private patients out of public hospitals and into her super clinics. Everyone has an entitlement but because of the Government's failure to deliver the world-class health service it promised more and more people are turning to private health insurance to safeguard themselves and their families. That is the most damning indictment of the Government.
The principle of community rating and the balancing provision of risk equalisation have been a very important security within the health insurance area. I have great concerns about the shift being taken by the Government on community rating. This is all the more curious given that the Government fought for risk equalisation and won handsomely when it was challenged in court. The Government is now diluting the risk equalisation provisions in a way which is not necessary. This certainly relates to some kind of payback connected to BUPA's withdrawal from the Irish market.
This is a technical measure. Even the explanatory memorandum is opaque in certain parts. The formula devised to calculate risk equalisation is complex and may not be perfect. The DÃ¡il cannot fulfil its responsibility to consider these changes if Members are allocated only five minutes to debate them. The removal of the exemption, which was forced through by the Minister and with which we agreed, was necessary to prevent the sharp practice of turnover of ownership in order to avail of the exemption.
Regarding risk equalisation at it stands, the case has been made by independent experts that the full burden of risk is not dealt with. It may even be as low as 50%, but we are now told that a further reduction is recommended, with a change to 80% and 20%. One thing about which we are sure in all this is that premia will rise. There is an almost fetishistic determination on the part of the Progressive Democrats to drive their agenda of "private good, public bad", "for-profit good, not-for-profit bad". That is the real agenda. The Progressive Democrats are driving the steamroller to ensure that they can push through their agenda in the dying days of this Government. They know that they will be kicked out of office very shortly.
We therefore have a further dilution in risk equalisation and a commitment to the removal of the derogation on solvency requirements for VHI. That points in only one direction, that of the privatisation of VHI. There is nothing in these changes to demand greater efficiency from insurers or better health care. It is not about those issues, even though that is what we must see. The idea is that competition in the market is somehow being jeopardised by risk equalisation. Hitherto VHI has set the fees and BUPA has followed. Although it is very difficult to get accurate figures, we all know that, as a result, BUPA made enormous profits in Ireland compared with what it was making in Britain. However, there was not and is not real competition, and there is no guarantee that this will bring it about. On the other hand, it will lead to increased premia.
We must talk about health insurance and examine it fundamentally, considering how we might use it to bring about a fair and efficient health service. There should be an opportunity when one establishes an expert group. Unfortunately, the Barrington group seems to have been set up to deal with competition and provide something for competitors entering the market, but there is a much broader agenda that should be addressed. We need a framework for the future whereby we consider the benefits of insurance and a universal system that integrates public and private. I hope that we will have that opportunity if and when we form the alternative Government that the people so desperately need. I very much regret the approach and the ideology behind these proposals.
As I said this morning, the passage of this motion will have far-reaching implications for health funding in the State and the health insurance of hundreds of thousands of people. The 25 minutes provided for this debate represents an outrageous insult to this House and to the people.
The Government is presiding over a shambles in our health services. Its fundamentally flawed policies and gross mismanagement of those services have meant that more and more people have had to â I emphasise that â take out personal health insurance for themselves and their families. It would not be their first choice. Many of these people are on relatively low and moderate incomes and do not qualify for a medical card, and they are concerned that if they rely totally on the public system, they will face long waiting lists and poorer health care outcomes. That is a sad indictment of the Government's management of the health services for the past ten years. People are paying on the double â let there be no mistake about that â for health care through taxation and private health insurance. As we have said here time and again, many people fall between two stools; they do not qualify for a medical card and they cannot afford private health insurance. That is the reality.
This motion approving the Minister's regulations will further hamper the VHI in the first instance and will undoubtedly lead to higher premia for people who are doing their business with that company. The wider recommendations of the Barrington report must also be mentioned in this brief opportunity. They are even more alarming, with the prospect of people being penalised for taking out personal health insurance later in life. Older people, people on pensions and in other circumstances, from their 40s onwards, will find themselves bearing an even greater cost to access health care in this State.
The implications of all that is before us are complex and wide ranging, yet we are expected to rubber-stamp this motion in less than half an hour. I note that another Deputy has arrived in the House so I will conclude by stating that we should be going in a totally different direction, towards a fully public system that is accessible to all on the basis of need alone and it should be paid for through fair and progressive taxation. That is the way forward, not this proposal or the type of system that the Progressive Democrats and Fianna FÃ¡il would wish to foist on us.
This morning a consultant neurologist from St. James's Hospital, Dr. Colin Doherty, spoke on Pat Kenny's radio programme. While I do not believe that I ever met him, I was uplifted by his commitment to the public health system and his clinical analysis of the effect and consequences of this Fianna FÃ¡il-Progressive Democrats Government's disastrous policies on the health service, namely, that the pushing of private hospitals and the thrust towards the privatisation of health care generally will inflict further wounds on an already wounded and over-stretched public health service.
There should be no need for private health insurance. We should have a public health service to which each citizen is entitled and that is adequate. The deliberate failure of the Government to provide an excellent public health service has frightened people so much that they are forced to seek private insurance. Community rating was a small concession to equality in that system of private insurance. However, even that is now under attack from the Barrington proposals, as is only logical because if one appoints a capitalist to report on an aspect of the health service, the result will reflect a capitalist ethos, which above all caters to the need for profit for big business interests.
This proposal is about increasing the profits of QUINN-direct and other big business elements considering what pickings they might make from the health service. It is a payback to the Government by QUINN-direct for rescuing it from a difficult situation following BUPA's pull-out. The most serious allegations have recently been made against the Government regarding motor insurance and the methods that it has applied. An investigation is under way in that regard, having been ordered by the Minister for Health and Children's party leader, the TÃ¡naiste and Minister for Justice, Equality and Law Reform, Deputy McDowell.
An important aspect of health has once again been handed over to speculators and business interests, and the maximisation of their profits is crucial. Patients are being treated as if they were sacks of spuds, commodities to be traded on the market, rather than people to be cared for, whose health needs are provided for. This is a further disgusting proposal that compounds the Government's already flawed approach to the health service.
Perhaps I will have one minute or even 30 seconds to say that I agree with previous speakers.
Let us consider the situation when health insurance was first introduced. It was designed for the wealthiest 15% of society, it was not designed for 54%, as is now the case, because people have no confidence in the public health service which has been run down, especially by the Progressive Democrats and Fianna FÃ¡il. The plans to co-locate will exacerbate that situation. As a result of the proposal before us, and due to co-location, we will have severe hikes in premiums. Let there be no doubt about that. As premiums increase, more and more people will not be able to pay them, and they will be forced back into the public health service which has been run down.
This makes no sense. The Government's health policy is a shambles. People know it is a shambles and the Government will reap its reward next month when we have an election on 24 May. The Government will see its health policy is a priority for people who will give the Government the thumbs down.
I take issue with Deputy Twomey's remarks about the Minister for Health and Children, Deputy Harney, demonising the nurses. At no stage has the Minister ever demonised the nurses.
On the contrary, she has gone out of her way to say publicly that she admires the nurses and appreciates very much the services they provide to communities throughout the country.
Unlike his other colleagues in Wexford, I am surprised Deputy Twomey got involved in the blame game over what happened there. When they raised the matter on the Adjournment on Tuesday night, Deputy Twomey's constituency colleagues, Deputies Howlin and Kehoe, were fair in their treatment of this awful tragedy both for Wexford, Donegal and the entire country.
May I continue? The purpose of the risk equalisation (amendment) scheme is to ensure there is more competition in the market. We want more health insurance companies in the market. We have been accused by the Opposition of not being interested in the consumer. On the contrary, we have more health insurance companies now than we ever had. We have also been trying to employ 1,000 extra consultants, which would have a serious effect on what we are talking about today. That would also increase competition and would have an effect on insurance costs for all the insurance companies.
Several speakers referred to young people in the health insurance market. It has not been decided yet, but the Government intends to incentivise young people to take out public health insurance. This should be welcomed by everyone.
The statement by Deputy McManus that the Progressive Democrats have an agenda of "private good, public bad" is totally untrue.
We want the best of private health care and we also want the best of public health care. We are trying to take the best of both systems and combine them to give the best service to our patients. The Government has been consistent in putting the patient firstââ
ââand then making decisions to implement these priorities. We believe in public private partnerships and in putting the patient first. We will continue to make those decisions.
The scheme we are discussing today is not designed to enable any insurer to benefit financially; it is a measure to compensate insurers for having a disproportionate share of the market risk. Consumers in the Irish market benefit from a range of regulatory protection, namely, community rating and open and lifetime cover. These measures will continue to apply. The regulatory framework for the market has been subject to scrutiny by the High Court which strongly endorsed the framework. The changes reflect the recommendations of the expert Barrington group and the Competition Authority.
The Government is fully committed to the principle of community rating and these changes endorse that and enforce this commitment. We are also ensuring the legitimate ambitions of all companies are taken into account in respect of what we are doing today. That 50% of the population has chosen to take out health insurance shows the regulatory framework supports the consumer. The changes made to the primary legislation are reflected in the amendments before this House. In additionââ
ââthey reflect the need to strike an appropriate balance between protecting the insured and facilitating the development of the market. No decision has been made to privatise the VHI.
The Government has brought forward a broad range of measures to protect those who do not have health insurance, including the waiting list initiative, the national treatment purchase fund, and also capacity expansion.
The amendments are not aimed at giving advantage to any particular insurer, rather they are a proportionate response to market developments. On behalf of the Government, it gives me great pleasure to commend the motion to the House.
The Dail Divided:
For the motion: 53 (Dermot Ahern, Michael Ahern, Seán Ardagh, Niall Blaney, Johnny Brady, Martin Brady, John Browne, Joe Callanan, Pat Carey, John Carty, Donie Cassidy, Brian Cowen, John Cregan, John Curran, Síle de Valera, Noel Dempsey, Tony Dempsey, John Dennehy, Jimmy Devins, Frank Fahey, Dermot Fitzpatrick, Seán Fleming, Pat Gallagher, Noel Grealish, Seán Haughey, Joe Jacob, Cecilia Keaveney, Billy Kelleher, Peter Kelly, Tony Killeen, Tom Kitt, Brian Lenihan Jnr, Conor Lenihan, John Moloney, Michael Moynihan, Michael Mulcahy, Éamon Ó Cuív, Charlie O'Connor, Willie O'Dea, Liz O'Donnell, John O'Donoghue, Denis O'Donovan, Ned O'Keeffe, Fiona O'Malley, Tim O'Malley, Tom Parlon, Peter Power, Seán Power, Mae Sexton, Noel Treacy, Dan Wallace, Mary Wallace, Michael Woods)
Against the motion: 36 (Tommy Broughan, Richard Bruton, Joan Burton, Paul Connaughton, Paudge Connolly, Joe Costello, Seymour Crawford, Seán Crowe, Ciarán Cuffe, Bernard Durkan, Damien English, Martin Ferris, Eamon Gilmore, John Gormley, Marian Harkin, Tom Hayes, Joe Higgins, Michael D Higgins, Phil Hogan, Brendan Howlin, Kathleen Lynch, Finian McGrath, Liz McManus, Arthur Morgan, Breeda Moynihan-Cronin, Catherine Murphy, Dan Neville, Caoimhghín Ó Caoláin, Jan O'Sullivan, Séamus Pattison, Ruairi Quinn, Michael Ring, Seán Ryan, Trevor Sargent, Liam Twomey, Mary Upton)
Tellers: Tá, Deputies Kitt and Kelleher; Níl, Deputies Neville and Costello.
Question declared carried.