Dáil debates

Tuesday, 18 January 2011

7:00 am

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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I move:

That Dáil Éireann:

is concerned that:

— a national emergency has again emerged in Ireland's hospitals with an unprecedented 569 patients on trolleys in January 2011;

— the Government will not publish legislation to introduce risk equalisation until 2013, despite having promised to do so within three years when it was struck out by the Supreme Court in 2008;

— the public hospital system is under increased strain due to rising unemployment at 444,000, businesses unable to access finance and many people in negative equity; and

— the VHI's 1.35 million customers cannot afford increases of up to 45% in their private health insurance premiums because of the failure of the Minister for Health and Children to introduce risk equalisation; and

calls on the Government to:

— instruct the VHI to postpone premium increases until the Milliman Report is published and debated; and

— expedite the introduction of risk equalisation.

I wish to share time with Deputies Catherine Byrne, Denis Naughten, Dan Neville, John O'Mahony, Deirdre Clune and James Bannon.

Photo of Séamus KirkSéamus Kirk (Louth, Ceann Comhairle)
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Is that agreed? Agreed.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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I understand we will be allowed the time we have lost tomorrow. Is that correct?

Photo of Séamus KirkSéamus Kirk (Louth, Ceann Comhairle)
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The House will have to agree to that proposal.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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I think the Whips have sorted it out, but we will not waste further time on the matter now.

Photo of Séamus KirkSéamus Kirk (Louth, Ceann Comhairle)
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It will have to be put formally to the House.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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Like many people, I am perturbed that we must bring this motion before the House. Sadly, it is another manifestation of a failure of Government policy that we find the VHI increasing its premia for customers, by up to as much as 45% for those on Plan B Options and 35% for those on Plan B. This means that the premium for an adult on Plan B will increase by €317 to €1,224 per annum while the premium for a person with a Plan B Options policy will increase by €444 to €1,430 per annum, which is a huge increase and amounts to an increase of €26 per month for Plan B customers and €37 per month for Plan B Options customers. Approximately 29% of health insurance customers hold one or other of these policies.

Plans C, D and E are also to increase by up to 25%. Plan C will increase from €1,431 to €1,788. Plan D will increase by 21% from €1,931 to €2,337. Plan E, which is a top of the range policy and covers private rooms in State high tech hospitals will also increase by 21% from €2,833 to €3,427. The average family of two adults and two children on a parent and kids policy will see their health insurance premiums increase by €331 per annum or €27.60 per month. The same price increase of 15% will apply to the premia of a further 60% of VHI customers.

These are startling figures in their own right. Coming as they do against the background of more than 440,000 people unemployed, nigh on 100,000 people having emigrated and others considering that option as we speak, many families being in negative equity and our public hospital system creaking at the seams, this is the last straw for many people. Many people who had been holding on have given up their insurance as a consequence of these proposed increases, the consequence of which will be more pressure on our public hospital system. There is no doubt but that this has been the effect.

The Minister introduced risk equalisation, which fell in the courts in 2008. The judge was clear that at issue was not the principle of risk equalisation but the manner in which the law was enacted. It was then open for the Minister to revisit that legislation and to bring new legislation before the House to rectify the situation. Members on all sides of the House agree with community rating, which has at its heart that people, regardless of age or condition, pay the same premium for the same package. There is no dispute in that regard. To underpin this, risk equalisation was introduced. Rather than bring in new risk equalisation legislation, the Minister said she would introduce a health levy. She was warned and advised, in this House and at committee, that this would lead to more people from the group we seek to encourage to keep their insurance - young people who help support the premia of the older members of our society - giving up their insurance. Sadly, the Minister did not listen and, sadly, that has been the effect.

According to a response to a parliamentary question to the Minister for Health and Children, the number of people with private health insurance has decreased by 70,000 in almost two years. At the end of 2008, some 2.297 million had private health insurance. This reduced by 37,000 in 2009 and by 33,000 up to end of September 2010. This clearly reflects the unaffordable increases in private health insurance premia during the past two years and the downturn in the economy and increasing unemployment. It is extraordinary that at a time when everything else, including groceries, gas and so on, are decreasing health insurance premia are increasing. The levy made health insurance even more unaffordable for young families and they too have dropped out. The levy was to compensate the VHI for the preponderance of older people on its books.

Let us consider the injustice of this. People who have for four or five decades paid VHI insurance premia, who remained loyal to the VHI and throughout that time used their insurance little if at all but considered it an insurance against future health problems, now, when in need of private health insurance in respect of a hip replacement, hernia, by-pass or other surgery, find that the VHI will make it unaffordable for them. They are to get only a slap in the face for all those years of loyalty.

A 45% increase is intolerable and unjustifiable. So much has happened in our health service during the past number of years. We have seen the lazy option taken every time, with cuts to the front line rather than the hard yards worked to reduce costs and ensure greater efficiency and patients suffering. We see this in our public health service.

We are tonight discussing the VHI which impacts hugely on our public health service. We have all heard of the plight of the 569 people who found themselves on trolleys two weeks ago, the highest number recorded since the commencement of recording of numbers and the continued cancellation of operations. People are now faced with having to give up their private health insurance and becoming totally dependent on the public health system, which is creaking at the seams. We all remember the late and very brave Susie Long who did not take out private health insurance because she did not believe it right to do so. She underwent a colonoscopy seven months later than she should have while lying opposite a gentleman, against whom she bore no ill-will, who had only to wait three weeks for his colonoscopy because he had private health insurance. We all know the sad outcome of that story.

We are asking tonight that the VHI not be allowed to implement any of these increases until the Milliman report has been published. I am told this report was commissioned by the Department of Health and Children and has been with it since August of last year and with the Minister since September last year. Further, I am told that in excess of €100 million could be saved if the recommendations contained in that report are implemented and the VHI did its business differently. It is clear that our health service is dysfunctional and that we do not utilise it in an efficient manner. We, on this side of the House, have long called for a different way of budgeting for our hospitals, namely, a money follows patient budgetary system. I know the Minister will say there are risks involved in doing so. I accept that. However, they are risks that can be catered for. We can stop people carrying out unnecessary tests and operations. It works in other jurisdictions such as Holland, Canada and Taiwan. Anywhere the money follows the patient system is introduced there is a saving of 10% in efficiency and running costs. The sum of €550 million is a huge amount. It is money that could be put into front line services. It would also mean that the services paid for in our hospitals by the VHI and other insurers would be cheaper. I have raised this matter before.

I hold the Minister responsible for her failure to introduce risk equalisation. The Minister of State told us in 2008 that this would take three years. We are now in 2011 and have been told by the Minister of State that it will take another two years, which is unacceptable. Clearly, there are systems abroad that we can modify to our needs. Surely it is possible, given the number of budgetary experts and health economists in the State, and the presence of the Health Insurance Authority, to expedite this. However, we must not allow the VHI to implement these increases without a debate and without the publication of the Milliman report, which will highlight another way of doing business.

I refer to a number of examples. A patient with a lesion who is covered by the VHI and who visits a GP pays him or her a fee. If the patient visits a hospital, the doctor is paid the same fee but the hospital is paid a side room fee, which is often twice that paid to the doctor. I have received complaints from people who went into hospital for a colonoscopy. The doctor's fee was €255 and the side room fee for the hospital was €450.

I received an e-mail two weeks ago. A member of the person's family went into hospital on the north side of Dublin as a public patient and was transferred to a private hospital for a cardiac procedure as a private patient. The person was in hospital for one afternoon and the bill was €35,000. The cost of the surgery and the implant was €25,000 while the hospital bill for one afternoon was €10,000. I do not understand why it has not been possible for the VHI to drive down costs when it has operated as a monopoly for the past 50 years. There does not seem to have been an attempt to revisit the cost of procedures as they became easier. Years ago, the removal of a cataract was a complex operation that took a long time. Such operations are much simpler nowadays and they can be done quicker. Why have the fees for this procedure not been revised?

Why is the VHI still not properly regulated by the Financial Regulator? Why does it not meet solvency requirements? Why are we still in conflict with the EU and the Commission about this? I am not sure how many derogations Ireland has sought at this stage but we are becoming a laughing stock. It is clear the market is not properly regulated and structured and other providers are not encouraged to enter the market. Everything needs to be reviewed but, at the core of this issue, we must protect customers and our citizens. There should be no hikes in premia until the Milliman report is implemented.

Photo of Catherine ByrneCatherine Byrne (Dublin South Central, Fine Gael)
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I thank Deputy Reilly for tabling the motion, which calls on the Government to instruct the VHI to postpone an increase in premia to allow us to consider the Milliman report. It is important for all of us to consider the report's recommendations in order that spending on private health insurance is properly looked after.

There is a new element of fear on the doorsteps in the past few weeks, especially among the elderly. With more than 569 patients on hospital trolleys in January and people's health at risk due to unemployment, financial worries, household bills, sick children and so on, people are afraid to cancel their premium in case they fall ill. They are afraid to take the gamble that they may need specialist help in the future and they are afraid to enter the public health system because many of them have been let down by it in the past.

The VHI proposal to increase premia by up to 45% is unacceptable and immoral and, above all, it will put untold strain on many people. The company has 1.35 million customers who cannot afford the increase at this time. They have private health insurance because that is where they have been led by the Government and the Minister. They wanted to make sure that if anything happened to them, they would have cover. The doors of hospitals are bulging with people trying to get in but they cannot be taken. Couples with young children are struggling to meet their child care bills and mortgage repayments. Thousands of them have given up private health insurance. An elderly man with no family who is surviving on €216 a week is trying to pay for his cover because he is afraid that if anything happens to him, he will not be looked after and he will have to wait two or three years for treatment if he does not have health insurance.

As Deputy Reilly said, thousands of people, particularly older people, are dropping their health insurance cover. They have worked hard all their lives and they have reared their children. They set aside money to pay their premia in their twilight years because they do not want to be a burden on their children. I met a couple recently, both in their 80s, who said it will cost them more than €2,000 a year to be part of the private health system, a sum they can ill afford. One man to whom I spoke last night said, at the end of the day, he had to wait almost 18 months for a hip replacement.

It is important that we have the opportunity to read the Milliman report because what is happening is a form of elder abuse. Many of the elderly feel secure because they have private health insurance. They feel they do not have to turn to their families if they fall ill but, above all, all they want is fairness. Services are not being provided to people through our public hospitals. They are told they have to wait up to six months for different procedures. I was contacted by a man before Christmas whose operation, which required daily preparation, was cancelled four times. We are living in a country in which many changes are happening and many of us, including myself, are getting older quicker than we thought.

Photo of Mary HarneyMary Harney (Dublin Mid West, Independent)
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The Deputy is not.

Photo of Catherine ByrneCatherine Byrne (Dublin South Central, Fine Gael)
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We must make sure that people in their golden years can live with a sense of security and belonging and, above all, a commitment from whoever is in government that, when they are sick, they will be looked after and they will not end up lying on trolleys for days on end or have procedures postponed for more than 18 months. It is within the Minister's power to open the report, read it and allow everybody else to read it to see what is happening in the private sector.

Photo of Denis NaughtenDenis Naughten (Roscommon-South Leitrim, Fine Gael)
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Families and elderly people are living in a state of fear following the announcement by the VHI of a 45% increase in the cost of health insurance. Young families are left with a stark choice - either pay the mortgage and hope a family member does not get sick or pay the VHI and become homeless. Parents of sick children are going without medical care themselves to pay for their children's medical bills. Surely they have enough to worry about in terms of the child getting better rather than worrying about where they will find the money to pay the GP or consultant.

Older people feel they do not have a choice. They are afraid to change from the VHI to another insurer. One cannot blame them. The insurance policies are very confusing. It is difficult to compare like with like. Young healthy people take a risk in changing from one insurer to another in case they do not have full cover. An elderly person who has perhaps been paying the VHI for up to 50 years does not feel he or she has a choice. Elderly people paid the VHI through difficult times when they did not need to make any claims and now when they need health insurance they are being forced to cut back on fuel to pay the dramatically increasing premia, which in turn is forcing them into a situation where they are more likely to get sick and be admitted to hospital, thereby putting further and greater pressure on the VHI.

We were told the problem would be sorted out, but instead VHI premia have increased for a third year in a row. A 45% increase comes on top of a 48% increase in the past four years. Every single day people are being forced to give up their health insurance. Where is the risk equalisation we were promised by the Government? Where is the fairness we were promised in health insurance? It always seems to be the same. The Government has a policy of being one report away from taking action on anything. It is putting further pressure on the already over-stretched public health system.

Let us consider the situation with trolleys and the INMO trolley watch figures. County Roscommon has a high dependency ratio given the number of older people. When one takes bed numbers and staffing into account in Roscommon County Hospital, it is equivalent to 100 patients a night lying on trolleys in University Hospital Galway. The situation at the moment is a crisis because elderly people are being forced out of the system due to the dramatic increase in insurance costs. As Deputy Reilly has outlined, those issues can be addressed. At one stage or another every single Member has telephoned the VHI to query an incorrect bill containing additional services that had not been provided. The response one gets is that they were the amounts outlined on the bill that came from the hospital. One wonders why one should bother to pick up the telephone to ring the VHI because it did not seem to care what claim was submitted. It just wrote out the cheque and sent it to the hospital. That ethos still exists within the VHI. Fine Gael's proposal that the money would follow the patient would address that issue and improve efficiencies. I urge the Minister to take action immediately.

Photo of Dan NevilleDan Neville (Limerick West, Fine Gael)
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I welcome the opportunity to discuss the matter and I congratulate and commend Deputy Reilly on introducing it. The issue is of great concern to many people. It is difficult for the many people who were used to health insurance to cope with the increase. People could not afford the premia before the increases and since the recent increases were introduced, it is evident that fewer people will get insurance with the VHI. That is especially the case with the elderly because they got hit with a 45% increase. Many people who have paid health insurance for up to 50 years are more concerned with health insurance than ever because of their stage in life. They will be forced to drop their health insurance with which they were comfortable all their lives. Now is a time when such people should be able to relax and enjoy their retirement. For various reasons there are 70,000 fewer people in the VHI in the past two years. The targeting of older people is unfair. I understand the difficulty that exists for the VHI but that is by virtue of the fact that the Government has not acted on risk equalisation. We now understand that risk equalisation will not be introduced until 2013. In ruling against the previous proposal, the court said there was some difficulty with it. It did not say it was unconstitutional or unfair but that legal problems existed. I do not know why we must wait until 2013 to correct legal problems many lawyers tell us could be corrected within months if the will was there to do it.

It is some time since I had an opportunity to discuss suicide with the Minister. I will use my remaining time to focus on that issue. The Minister of State, Deputy John Moloney, usually deals with the matter. I commend him on his efforts but I am disappointed he has not had support from the Government by way of the resources he should get. The Minister must recognise that the level of suicide and suicidal behaviour is a serious social health issue which must be comprehensively addressed and the necessary services put in place.

Research going back to the 1980s demonstrates that suicide and mental illness increase in times of recession and that suicide is linked to financial disasters. It should not come as any surprise that we continue to see more stress, suicide and mental disorders. Official figures indicate that suicide rates increased in 2009 by 25%. The potential psychological impact of economic recession on public health is severe. People who are unemployed are two times more likely to die by suicide than those in employment. The high rate is partly because people with psychiatric illness are at a greater risk of losing of their jobs. There is an association between unemployment and suicide. However, even among young people with no record of serious mental illness, unemployment is associated with a 70% greater risk of suicide. Prospective individual levels of suicide show that unemployment has a causal influence on depression and suicidal thinking. Job insecurity is associated with a 33% greater risk of common mental disorders - mainly anxiety and depression. People with mental disorders are more likely to be in debt than those who have no mental disorder. A research document from the United States indicates that a loss of income rather than low income was associated with increased suicide levels. I take the opportunity to impress on the Minister that greater resources should be invested in the area and there should be a response because of the special circumstances at the moment.

Photo of John O'MahonyJohn O'Mahony (Mayo, Fine Gael)
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I welcome the opportunity to contribute to the debate on the dysfunctional health service which cracked again in early January with the unprecedented high numbers on trolleys and the cancellation of elective surgery and other knock-on effects. I commend Deputy Reilly for tabling the motion at this time because it was slipping off the radar of the Government or it hoped it would go away. The Government was involved with the internal war in the Fianna Fáil Party and sending weekly reports to the EMU and the IMF.

The problem did not go away for the 569 people who were lying on trolleys who had no prospect of getting a bed because of all the ward closures and front line cutbacks, all of which resulted from slashed budgets and wastage. I will illustrate a couple of quick examples of wastage. A couple of month ago I received figures from the HSE indicating approximately €100 million had been spent on agency staff. The process that led to that was the ending of temporary contracts for nurses who were then subsequently re-employed through agencies with a 36% charge on top. Mayo General Hospital was one of the more efficient hospitals in the country in 2010. It came close to budget, yet my information is that a further cut of €10 million will be sought between the hospital and community health services in 2011. Mental health services in County Mayo have been decimated. In the past 18 months to two years 80 mental health nurses who have retired have not been replaced. By 2015 student nurses will be asked to give a year's free labour to hospitals. They will not be paid but will be counted in the staff allocation. It is not slave labour but free labour.

The enormity and timing of the VHI increases, the targeting of our elderly and the response by the Minister beggars belief. I could not believe it when I came in here this evening and read the amendment set down by the Minister. It refers to ensuring that all patients are assessed, treated and discharged or admitted within six hours. Often, we hear of reality and spin. The relevant words that refer to the policy of the Government are "to pursue the targets". Although the Minister may pursue a target of admitting patients straightaway, she could be pursuing it for the next 100 years. The amendment referred to an acute medicine programme which would have a senior medical doctor seeing a patient within one hour. That is simply not taking place. There has been a difficulty in recent years with the Government not holding up its hands, yet it has put out such an amendment. It is unbelievable.

I support Deputy Reilly's call for the VHI price hikes to be postponed immediately. The Minister of State, Deputy Dara Calleary, was on local radio in Mayo and called on the VHI to postpone them. I am sure he has been in contact with the Minister's office in this regard. I call for a response from the Minister. Will the Minister call on the VHI to postpone the increases, especially since all the people concerned have been hit with the increased levies and charges in the past two weeks? It is not good enough. I commend the motion to the House.

Photo of Deirdre CluneDeirdre Clune (Cork South Central, Fine Gael)
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I am please to speak to the motion which follows the announcement by the VHI that it intends to impose a staggering increase in the premiums payable by its customers from 1 February next. The proposal has shocked people. It calls into question what is taking place in the VHI. Why have things being allowed to reach the point where there will be increases of the order of 45% on some premiums? Such increases come at a time when the cost of medical inflation is reported to be 10% or less. We are right to ask these questions and the people want answers to them. People are keen to know why competition in the marketplace has not brought order to the situation. The VHI has held a monopoly for almost 50 years. However, it has brought about increases on this scale, in sharp contrast to the increases implemented by its competitors.

Elderly people who have contributed for many years and who have not claimed must accept suddenly that they have this problem. Where have their contributions over the years gone? What does it mean for them? Should they switch to an alternative provider, something they have no wish to do? However, their current provider, the VHI, appears to be encouraging them to go to their competitors because it does not want them. This is probably at the heart of the debate. The VHI is trying to shed many of its elderly customers, whom it perceives as representing an onerous cost on its operations.

Are the answers to all these questions in the Milliman report? We must see it and the motion this evening calls for it to be published. It should be examined and debated prior to allowing any increases by the VHI. The fact that the report has not been published adds to the anger among consumers, who have been asked to take these proposed increases at face value. Time and again this evening, speakers have outlined how efficiencies and changes could be brought about and how the VHI operates.

We are all aware of experiences of people where a bill from a hospital or medical situation arrives which is considered to be sizeable, but the people have tried to point out that they are a customer of the VHI. There appears to be little satisfaction in this area. With any business or operation one examines the costs first and one tries to reduce the costs rather than passing on any increase to consumers. That is the basis of any business. We must see the Milliman report. The reality of these price increases is that the hard-pressed families and individuals who are already under considerable pressure will decide to abandon their health insurance. In many cases this will put further pressure on an already over-stretched health service.

I call on the Minister to explain exactly why she will not publish the Milliman report. What are the excuses? Are they of a legal nature? Do they relate to commercial sensitivity? We need to know and we must see the contents of this report in the interests of all hard-pressed individuals who have been asked to bear the brunt of these unnecessary costs.

8:00 am

Photo of Mary HarneyMary Harney (Dublin Mid West, Independent)
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I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"— welcomes the action by Government to reduce unacceptable waiting times for patients in emergency departments and to pursue the target of ensuring that all patients are assessed, treated and discharged or admitted within six hours of registration at an emergency department;

— welcomes the roll-out of the acute medicine programme which will provide that every medical patient presenting to hospital will be seen by a senior medical doctor within one hour and will provide access to same day diagnostics;

— endorses the Government's strategy that the best way of achieving a stable health insurance market, where policies are relatively affordable for older and sicker people as well as younger and healthier people and where health insurance can evolve in a way which supports overall health policy objectives, is a situation where:

— the core policy of community rating is supported by an effective, transparent risk equalisation scheme;

— the State does not act as both regulator of the market and owner of a company in the market, particularly one with a large or dominant market share; and

— there is a more even balance of older customers between companies in the market;

— notes that, following the Supreme Court decision in July 2008, the Government introduced interim loss compensation arrangements through the taxation system with effect from 1 January 2009 which to date has provided for the transfer of €89 million and is estimated to allow for the transfer of a further €70 million in 2011;

— underlines the Minister's intention to publish legislation this year which will provide for the development of a full, robust risk equalisation scheme which will protect the fundamental objective of community rated premiums, with transitional measures in place pending the introduction of the full scheme; and

— welcomes additional comprehensive actions being taken on private health insurance which include:

— arranging the sale of the VHI, with appropriate capitalisation and authorisation in advance of this; and

— pursuing measures to achieve a more even balance of customers among companies in the market."

I was very disappointed by the decision of the VHI to raise its prices so substantially from 1 February next, a decision of which I was not aware until the morning it was announced. By any standards the increases were remarkably high, ranging from 15% for Plan A, parents and kids, life stage choices and one plans, to as high as 45% for Plan B Options.

I am keen for as many people as possible to continue to buy private health insurance and a price increase of this magnitude could make this difficult. However, I emphasise that there are several alternative, cheaper products which offer similar coverage. There are many alternative plans within the VHI and in the other two companies, Aviva and Quinn Healthcare, which offer the same or similar benefits for a lower price.

The recent price increases have highlighted the extent of choice in the Irish market. The best place to go for independent, comparative information on prices is the Health Insurance Authority. The HIA is an independent statutory body, which advises me as Minister for Health and Children on issues relating to the private health insurance market. The authority has an excellent website that informs people of their rights as consumers. It has a user-friendly system to help customers compare prices and benefits offered between and within the health insurers. In addition, the HIA has been providing telephone advice on the same basis. Its website has had 70,000 hits since the increase was announced and it has dealt with more than 2,000 queries. At my request, it has increased the staffing of its helpline to help customers of health insurance companies.

It is interesting to note the variations in prices on offer, both within and between companies. From 1 February 2011, VHI Plan B will cost €1,224 for an adult, whereas the VHI teachers plan, offering the same hospital cover as Plan B, costs €772. This plan must be open to everyone and is not, as its title might suggest, only available to teachers. Similar differences in price are available for VHI Plan A and its comparable VHI First Plan Starter. Equivalent cover to VHI Plan B is provided by Aviva, with its Smart Plan costing €759 and Quinn, with Quinn company Heath Plus costing €690. Deputy Naughten asked a question on this detail. I have all this information and I would be pleased to send the authoritative information to all Members. The information is easy to follow and compares like with like. The Plan A to which I referred costs €698.93 but the VHI First Plan Starter costs €495. In quoting these examples, I do not recommend one company over another. Clearly, it is possible to get very good value even when switching within plans in the same existing company. The examples show that it is possible get better value in health insurance in Ireland.

It is important that the other insurers in the market, which have indicated their willingness to take on all customers, take the initiative now and offer plans to older persons that will attract them to move between insurers. In this way, the market could begin to move towards a more equal sharing of older customers among insurers and we could see competition driving efficiencies in services provided.

Crucially, people in Ireland still have a choice. Health insurance is voluntary. This is unlike the system advocated by Fine Gael whereby people must pay compulsory health insurance as in the case of the Dutch system. Under that system, a person living in Amsterdam must pay between €88 and €111 per month for the most basic package. In addition he or she must pay 6.9% of salary for a health compensation fund. In real terms, this means that a couple on a combined income of €50,000 would have to pay €5,562 towards health insurance.

I remind the House that when the VHI was the sole provider of private health insurance in Ireland the Minister had responsibility for approving price increases. However, this would be counter productive in a competitive market. I believe the right decision was made in leaving that function to the VHI itself since the advent of competition. This was recognised by the removal of the provision for ministerial consent for the VHI board to carry out health insurance schemes in the Voluntary Health Insurance Acts.

As Minister for Health and Children, I have responsibility for governance matters relating to the VHI, such as board appointments and the receipt of its annual report and accounts. In this context, I asked my Department's actuarial advisers, Milliman, to carry out a detailed examination of the VHI's claim costs last year. I was conscious that while the VHI faces a difficult market environment, partly owing to the high age profile of its members, it was important also to look critically at the way in which the cost of claims it receives are managed. With the co-operation of the VHI, Milliman conducted a detailed assessment of the situation.

I received the Milliman report in September last and it was given to the board of the VHI as well as to the Health Insurance Authority. Owing to the extensive commercial sensitive data in the report, I have not published it. To do so would unfairly reveal information which would put the VHI at a disadvantage as regards its competitors which have not had to reveal similar commercial information.

I believe, however, that the time is now right to release as much of the information contained in the report as possible, subject to the requirements of commercial confidentiality. To this end, I have asked my Department and Milliman to examine what could be released in redacted form as soon as possible.

I will now outline some of the Milliman report's main findings. The study concluded the VHI has given limited focus to what it is paying hospitals. The VHI could potentially make savings of a minimum of 5% to 10% in this area regardless of the risk profile of the insured population, even though the company has a very high proportion of the older population. The report concluded savings of this order are still possible but acknowledged such an improvement would take some time to implement.

The Milliman report also concluded the VHI has been concentrating on the issue of risk equalisation to the exclusion of improving its techniques for managing claims effectively. It found that while moving to a more effective management of claims would require an investment by the VHI in staff and other resources, this could be more than offset by the savings it would produce in the cost of claims.

Milliman reviewed the VHI's experience of claims costs between 2007 and 2009. It found a high trend for utilisation of day cases at private hospitals but also substantial increases in average costs for inpatient procedures. The report also found there were material increases in the utilisation in high-tech hospitals which have higher unit costs than other acute private hospitals, increasing rates for day case utilisation at acute private hospitals combined with substantial increases in average costs for inpatient procedures, and the claims costs per person between 2008 to 2009 rose by 19% while premium increases were 13% over the same period. Premium increases have inevitably been constrained by the competitive landscape in which the VHI operates.

The Milliman report concluded the VHI had made impressive progress in the past two years, including a 15% reduction in consultants' fees, a 6% reduction in private hospital fees and a reduction in its own internal administration costs. The study pointed to several important issues which the VHI must address regarding how it manages its claims. There is no doubt the VHI operates in a challenging marketplace and faces particular challenges from having the great majority of older customers who, understandably, give rise to greater costs of care. However, the lesson from the Milliman report is that the VHI can and must address its claims costs aggressively rather than relying on other elements such as risk equalisation or large price increases to help sort out its difficulties. I have discussed the various issues raised by the report with the VHI's chairman and chief executive officer. Without interfering in the running of the company, I believe I am entitled to insist that these issues be addressed. This is made all the more important given the VHI's decision to increase its premiums by so much.

It must be emphasised it is open to all consumers to switch health insurance policies without penalty. Those who have a policy can switch to the same level of cover without any extra costs and without waiting times for cover to apply. Neither do customers have to wait for their policy renewal time as they can switch whenever they choose. These are key principles of the market.

All customers have the right, guaranteed in law, to switch between or within insurers to get better value. This includes switching to a different plan with their existing insurer or another insurer to get better cover to reduce their premium costs. This rule applies regardless of the age or health of any individual consumer. Health insurance customers can switch easily without having to serve added waiting times and cannot be refused by another insurer. Provisions in the relevant health insurance legislation ensure switching is as easy and seamless as possible for customers.

That said, I am aware the Health Insurance Authority has received some complaints about insurers apparently giving incorrect or somewhat misleading information to customers, especially those in the older age groups who want to get better value. I regard any such practice very seriously and am calling on all insurers to deal honestly and appropriately with all consumers. I would be very concerned if any company was trying to discourage customers from joining or from moving plans.

I have asked the Health Insurance Authority to monitor the situation closely to ensure all customers are given accurate information about their right to switch policies without penalty. In particular, I am anxious to ensure customers are not misled by any insurer about the ease with which changes can be made or about the requirements that must be met before switching. The Health Insurance Authority will play an important role for customers in ensuring they have accurate information and protecting them through monitoring the implementation and enforcement of the health insurance Acts. The authority can enforce the Acts, which require community rating, through the courts.

Since the announcement of the VHI price increases, there has been much criticism about the alleged failure of the Government to put in place a system of risk equalisation that ensures community rating for consumers. Community rating means there is no distinction between young and old or healthy and sick consumers in the open market. Everyone is charged the same premium for a particular plan subject to several exceptions. These exceptions include children where the premium must not be more than 50% of the adult premium, full-time dependent students under the age of 23 years where the premium may be reduced but by not more than 50% of the adult premium, and members of group schemes where the premium may be reduced by up to 10%.

We need risk equalisation in a market in which there is more than one insurer in order that community rating can be protected. When the VHI was the sole provider before the market was opened up in 1996, it could offer community rated plans without the need for risk equalisation. Since there was no other insurer, it could set its premia at a level that spread the risk across all age groups. There was no danger of a competitor seeking to attract the good risk - younger customers - while leaving the VHI with the older clientele.

Health insurance operates on an unfunded basis which means moneys paid in through premia are paid out in claims while also paying for administration and overheads. Moneys are not paid into a fund towards customers' future health which means in a community rated market protections for customers' interests through risk equalisation are of such importance.

With competition, there is every danger that one insurer, whether the VHI or another company, is left with the highest costs simply because of the age of its clients. It is clear, therefore, that we need a risk equalisation scheme that subsidises the cost of health care for older and sicker people across the market of health insurers, especially where one or more companies has a substantially greater share of older or sicker customers.

For historical reasons, because it is providing health insurance since 1957, the VHI has a disproportionate share of older customers. This means it has a preponderance of the claims costs in the market with some 62% market share but 80% of the claims. The Government has worked hard to establish a legally sound system of risk equalisation since the rejection of the earlier scheme by the Supreme Court in July 2008.

Following the court's decision, the Government moved quickly to safeguard community rating. It was clear an interim risk equalisation scheme for a period was needed to allow the complexities of a full new system to be worked through. It is a very complex area and it was not possible at the time, contrary to some recent claims, simply to make minor technical amendments to the legislation to fix the problems identified by the Supreme Court.

Within months of the Supreme Court's decision, the Government had put in place an interim scheme effective from 1 January 2009. It will operate for three years, ending on 31 December 2011, with some carryover to 2012 for policies renewed during this year. While not as far-reaching as full-scale risk equalisation, the interim scheme has been a very important form of protection for older customers.

The scheme works by transferring resources from insurers with good risks to those with poorer risks. For policies commencing in the period 2009 to the end of 2011, the scheme will provide for a net benefit to the VHI of an estimated €159 million, from Aviva and Quinn Direct. This amount comprises €41 million in 2009, €48 million in 2010 and some €70 million in the current year. The true extent of these transfers under the interim scheme is not commonly realised. It is the first scheme which has actually transferred funds from insurers with lower risks to an insurer with higher risks.

I do not intend to go into the technical details of how the interim scheme works. Suffice it to say that it allocates tax credits to insurers for persons in three age bands and that it is funded by the payment of a levy by all insured persons in the market. In addition, the scheme is Exchequer neutral. When I first introduced it in 2009, the scheme allowed insurers with additional costs arising from insuring older people to be compensated for up to 50% of these costs. This year, following advice from the Health Insurance Authority, HIA, the Government increased the level of compensation from 50% to 65%. This is a significant level of support in respect of older customers and it has played a valuable role in assisting with the stabilisation of the health insurance market in advance of a full risk equalisation scheme.

My next priority is to introduce a transitional risk equalisation scheme with effect from 1 January 2012, when the existing interim scheme will expire. To this end, I asked the HIA to advise me on the nature and form that a transitional scheme should take, as well as the approach the Government should take in respect of a full risk equalisation scheme. I received the HIA's report on 23 December last and am considering it at present. I am now working to prepare legislation to give effect to the transitional scheme. I am also working on legislation for the full risk equalisation scheme, which I want to have introduced from 1 January 2013.

Various criticisms have been levelled - not least in the context of this debate - in respect of the time taken to introduce a new risk equalisation scheme. It is important to explain what is involved. Contrary to some claims, this is not a simple or straightforward process that can be put in place quickly. It is complex and technical and requires careful drafting to ensure we have a robust system that is not only legally secure but that will also be capable of easy implementation from an administrative point of view. The compliance costs must be realistic and the benefits of the process must outweigh the costs of implementation.

In order to be fair and accurate, both the transitional and full risk equalisation schemes will need to be based on good data. The latter must be collected by insurers in respect of every insured person and must be analysed appropriately. The logistical aspects relating to putting the data system in place, and the arrangements for calculating fair risk equalisation payments, will take time to complete properly. The necessity for accurate data is acknowledged by the Dutch Government and the lack of this data has caused the latter some concern. Its report on its health system states:

The data currently available cannot yet be adequately analysed in terms of demographic characteristics such as socioeconomic status and ethnic grounds. That makes it difficult to judge whether all people have equal health care opportunities (equity). Much of the current information about health care providers is based on self-reports, and the quality of that information is subject to dispute.

We must prepare clear legislation in respect of what is a complex area and then allow time for the necessary administrative mechanisms to be put into operation.

There are also other considerations. Legislation in this area is subject to scrutiny by the European Commission and must comply with various EU directives relating to non-life insurance matters. The EU Commission has, for many years, acknowledged Ireland's right to introduce risk equalisation in the context of our health insurance system. This support is contingent on a number of key principles being observed and the Commission will examine any proposals from a State aid point of view, as well as a competition perspective. My officials have been in regular contact with the Commission to brief it on Government plans and initiatives in recent times. We will continue this process as new plans and proposals for the transitional scheme develop.

As a result of these practical considerations, it is not simply a matter of our hurrying matters up. I am committed to putting a full system of risk equalisation in place as quickly as I believe is possible - that is, by 1 January 2013 - and, in the meantime, to putting the best possible transitional scheme in place by next January. I am of the view that these deadlines are realistic and I will do everything possible to achieve them.

I wish to take this opportunity to update the House on a number of interrelated measures that the Government has decided to implement in respect of private health insurance. Last May, the Government announced a series of integrated measures to reform private health insurance market. The objectives of these measures were to achieve a stable health insurance market, where policies are relatively affordable for older people, in particular, and where health insurance can evolve in a way which supports overall health policy objectives; to support the core policy of community rating by the implementation of a new, robust risk equalisation scheme; to ensure the State does not act as both regulator of the market and owner of a company in the market by arranging for the sale of VHI, with appropriate capitalisation and authorisation in advance of this; and to pursue measures to achieve a more even balance of older customers among the health insurance companies on the market. These objectives are vital in the context of the provision of an equitable, well-functioning private health insurance market in Ireland.

The steps the Government promised to take, and on which it is now working, include the sale of the VHI, to be preceded by appropriate capitalisation and authorisation of the company - authorisation is the process by which the Central Bank deems it appropriate for an insurer to operate in compliance with all requirements, including solvency, in an open health insurance market; the updating and reform of the minimum benefits that must be offered by all health insurers to their customers; and the implementation of new provisions to promote lifetime community rating, by creating financial incentives for people to buy health insurance at an early age, rather than leaving it until later in life. I wish to deal briefly with each of these promised steps.

It has been the Government's view for some time that there is no good reason for the State to retain ownership of one of the country's health insurers, especially in a competitive market. Indeed, we are of the view that it is not desirable that the State should be both regulator of the private health insurance market and the owner of the largest company in that market. This issue was raised as far back as the White Paper on Health Insurance published in 1999. In May 2010, the Government formally confirmed its intention to dispose of its interest in the VHI and we have now commenced the process of so doing. My Department is currently considering tenders for advisers to provide financial and legal advice on how best to sequence the process for selling the company. It is hoped to award a contract to the successful tenderer in the next month or so.

The first task of the chosen advisers will be to prepare a report on the possibility of rebalancing the market in the context of the proposed sale of the VHI. This task is necessary because of the disproportionate number of older subscribers with the VHI. Ideally, there would be a more even spread of good and less attractive risks across the health insurance market. This would balance the market and help improve competition on the basis of efficiency rather than on that of age or other risks. It would also assist in reducing the extent of risk equalisation payments that is currently necessary between insurers.

The VHI needs to be formally authorised by the Central Bank of Ireland. It is also likely to require a capital injection but the extent of this will only be known nearer the time of sale. The ultimate objective, therefore, is to rebalance the private health insurance market, achieve authorisation and capitalisation of the VHI and divest the State's interest in the company.

Risk equalisation will be a key requirement of a well functioning market. This is a complex and difficult process and critical aspects of it will require EU approval in the context of State aid and competition law. In my opinion, this is the right approach. This agenda must be achieved irrespective of whatever funding model may be used for the health service in the future. Even if it is decided to move away from tax-based funding for the health service as a whole, we will still require a risk-equalised market and we will still wish to sell the VHI following a process of authorisation and capitalisation.

There is also a need to change the current regulations governing the minimum benefits that must be offered by insurers to their customers. The most recent review of these regulations was in 1996, although some minor technical adjustments have been made in the interim. At my request, the HIA has prepared a report on the minimum benefits that should apply in the future. I received its recommendations on 23 December last and am currently considering them. I want to bring forward proposals as soon as possible. The current regulations are almost entirely focused on hospital benefits and changes will be considered which will reflect developments on the market. In particular, I would like the minimum benefit regulations dealing with different approaches to chronic illness management and primary care.

I intend to bring forward new rules to encourage people to take out health insurance at an early age. This will involve gradually higher costs being applied to customers the longer they wait to take out private health insurance for the first time. For example, it would cost a 50 year old person joining a scheme for the first time a higher amount than a 50 year old who was a continuous subscriber since the age of 30.

A break period will be permitted to take account, for example, of times during which it was not possible for the person to buy health insurance due to unemployment or otherwise.

This debate raises key issues about our private health insurance market. Like everyone else, I was very concerned at the extent of the price increases announced by VHI on 6 January last. However, I believe consumers have real choices in the market and I urge them to take the advice of the HIA in this regard. I am determined to ensure consumers are made fully aware of their rights and that they have every opportunity to select the insurance plan that suits them best and is good value for money.

To reply to issues raised in the debate, the risk equalisation legislation was introduced by the then Minister, Deputy Michael Noonan, in a Fine Gael-led Government. When I for the first time triggered the risk equalisation scheme on the advice of the HIA, I was strongly criticised for so doing by Fine Gael. That decision was litigated against by BUPA; we won in the High Court but lost in the Supreme Court. Many issues were advanced in that litigation, although the Supreme Court adjudicated in regard to one matter.

If it had been possible to bring in a simple amendment quickly, there is no doubt there would have been further litigation and we would still be tied up in the courts. What we did instead was to use a levy and tax system approach to transfer money. As I said, by the end of this year, approximately €159 million will have transferred. There was a three year holiday for new companies which did not have to pay risk equalisation, so when BUPA was being sold to Quinn, the latter company was able to avail of the three year holiday. When I introduced legislation in February 2007 to close that loophole, it was opposed by Fine Gael. When we introduced the tax relief at source, it was heavily criticised by Fine Gael. Indeed, Deputy Reilly, despite his motion today referring to the introduction of risk equalisation, challenged me at a meeting of the health committee in regard to the VHI by stating: "With a huge market share and new players trying to come into the market it does not make sense."

Risk equalisation or tax relief at source are about charging more to younger people to subsidise older people. That is the reality, so there is no point saying nothing has happened. We have tax relief at source and money is being transferred over, which is a good thing. However, each time we have triggered an initiative that transfers over money, Fine Gael has objected to it on the grounds it is not warranted.

I am anxious, as every successive Government has been, to ensure we maintain community rating, which the Insurance Acts require. If VHI is in contravention of that principle as a result of the recent price increases around Plan B in particular, it is a matter for the HIA to take action in that regard. I know it will have the support of everybody in that matter.

Photo of Áine BradyÁine Brady (Kildare North, Fianna Fail)
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I wish to support my colleague, the Minister for Health and Children, Deputy Mary Harney. In particular I wish to address the issue of acute hospital services and emergency departments.

Emergency departments are the front line for our health services and have a higher public awareness profile than virtually any other service. Approximately 1.2 million individual presentations were made through the doors of 33 emergency departments during 2010 and almost one third of the people who presented were admitted to hospital. As the Minister has already stated, the early weeks of this year have seen too many people waiting for an unacceptable period of time in emergency departments. The Minister has met the HSE and has impressed upon it the need to improve waiting times in emergency departments so all patients are assessed, treated and discharged or admitted without unnecessary delay.

The HSE has taken specific steps to cope with the increase in activity that has been experienced this year, including opening beds which are normally closed for seasonal reasons. Other actions taken by hospitals include increasing the number of ward rounds, including at weekends, to ensure that any patients who are ready to go home are discharged with support as necessary from community-based services.

In addition, the HSE has recently carried out a specific performance improvement project in certain hospitals which have experienced particular problems. Teams working in conjunction with the hospital management have provided reports and recommendations to the hospitals aimed at improving the work of their emergency departments. The HSE is putting in place improved frameworks to manage and closely audit the implementation of the recommendations arising from this project. The HSE has continued to closely monitor and address the situation. Weekend discharge ward rounds continue to take place and priority is given to access to senior decision makers in emergency departments from on-call admitting teams.

The problems of long waiting times and access to hospital beds cannot be solved within the emergency department or hospital alone. Solutions lie in the wider health care system. For this reason, the HSE has undertaken a number of initiatives such as the winter initiative programme, the code of practice for integrated discharge planning and actions to reduce the number of delayed discharges, including the introduction of the fair deal. Other innovations undertaken by the HSE include the development of emergency care networks and regionally governed services such as acute medical and assessment units, rapid access clinics and minor injury units.

The HSE continues to focus on a system-wide approach to improving access to hospital. A key initiative is the new acute medicine programme and related programmes which seek to channel patients quickly to the service best suited to their needs and to reduce the usage of emergency department services by those who can be best treated elsewhere. Following implementation of the acute medicine programme and its related programmes, medical patients presenting to an acute medical unit will be seen by senior medical doctors within an hour. These doctors will have access to the relevant diagnostic services, which will enable them to make decisions about the admission, care and treatment required for patients in the shortest possible timeframe. The goal of the programme is to reduce the admission rate of medical patients to hospitals and generate medical bed day savings while maintaining the quality of outcomes for patients.

There has been some discussion around the number of beds available within the hospital system. The clear focus of the health service is, and must continue to be, on the number of patients we treat and how we treat them, not on the number of beds in the public system. The 2011 national service plan commits the HSE to treating people more effectively by reducing costs and reforming the way services are provided without reducing access to appropriate services. We are treating more patients each year within the available resources and we are measuring and improving patient outcomes, which will continue over the coming years.

The HSE's actions are focused on protecting front line services, in particular emergency services, maintaining the quality and safety of services and achieving service plan targets. The HSE's commitment to national programmes, such as the acute medicine and surgical programmes, will support the achievement of these targets in 2011. I am confident that this is the correct approach and will allow the HSE to address the impact of planned health service budget changes signalled over the next few years while maintaining the number of patients treated and improving patient outcomes.

The key to addressing the emergency department challenge is an integrated proactive management by all concerned throughout the system. The Minister has asked the HSE to ensure that minimising waiting times in emergency departments is a key priority in its service to patients.

Photo of Séamus KirkSéamus Kirk (Louth, Ceann Comhairle)
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I call Deputy Jan O'Sullivan.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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Can I confirm the arrangements for my speaking time?

Photo of Séamus KirkSéamus Kirk (Louth, Ceann Comhairle)
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The Deputy has 20 minutes. As we finish at 8.30 p.m. the Deputy will also commence tomorrow.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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I commend the Fine Gael party and my colleague, Deputy James Reilly, on bringing forward this motion, which gives us an opportunity to address in particular the issues around private health insurance but also the broader issues in regard to health. I apologise that I had to be absent for part of the beginning of the debate.

I will begin by touching on a point which I may return to later, which is dealt with as a first point in both the motion and the Government amendment. I share Deputy O'Mahony's amazement that the Government "welcomes the action by Government to reduce unacceptable waiting times for patients in emergency departments" and the claim "that every medical patient presenting to hospital will be seen by a senior medical doctor within one hour". That is fantasy land. What world is the Government living in if it thinks this is what is happening in our hospitals?

I have spoken to people who have been not just hours, but days waiting in emergency departments over the Christmas period trying to get access to some kind of treatment and care in highly unsafe and crowded conditions. We discussed this issue during Question Time last week. I find it astonishing that the Government is so distanced from reality as to think it can get away with using that kind of wording in an amendment to a Dáil motion. If the backbenchers read that, they will be inclined to support the Opposition because they will believe the Minister is living in a fantasy world.

Some 569 people were on trolleys in one day, with 1,500 beds closed and people occupying acute beds who should be out in the community. It is like groundhog day from the time the Minister said this was a national emergency back in 2006. That is the real world. This idea people are being seen within one hour by a senior medical doctor is some kind of dream the Minister must have had last night before she put down the wording of the amendment. It is certainly not reflective of what is happening in hospitals.

There is a much broader issue involved than merely the increase in VHI charges. Simply laying the blame on the VHI and advising customers to shop around and consult the Health Insurance Authority website is an inadequate response to what has happened. The current situation is evidence that the market is not working. Most people who take out private health insurance do so because they are fearful of the situation in the public health system, with 569 people on trolleys in accident and emergency departments, long waiting times for procedures and so on. People take out private insurance because the public system is not properly supported and funded in such a way that there is equality of access. The basic problem is that we do not have a one-tier system. People opt for insurance in order to jump the queue ahead of those who cannot afford to do so.

However, increasing numbers of people are beginning to question why they are paying so much for health insurance and what they are getting in return. They are asking whether they are not, as a citizen of this country, entitled to hospital treatment. However, while some are cancelling their insurance because it does not offer value for money, there are many others for whom it is simply no longer affordable. It is a much more broad-ranging issue than merely balancing the various health insurers and ensuring a more even playing field. Which is not to say that this must not be done, and I strongly support the section of the Fine Gael motion which calls for the risk equalisation legislation to be introduced. That has not been done in accordance with the timeframe the Minister announced when she introduced the Health Insurance (Miscellaneous Provisions) Bill 2008 in the wake of the Supreme Court decision in July 2008. We have had a crude interim measure for several years-----

Photo of Mary HarneyMary Harney (Dublin Mid West, Independent)
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Three years.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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It is a long time.

Photo of Mary HarneyMary Harney (Dublin Mid West, Independent)
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It was always going to be three years.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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Surely the legislation could have been figured out sooner. I accept it is complicated, but it is a long time-----

Photo of Mary HarneyMary Harney (Dublin Mid West, Independent)
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Money is transferring. What is the Deputy's issue?

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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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.