Tom Fleming (Kerry South, Independent)
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Question 3: To ask the Minister for Health if he will arrange for a person from the Office of the Comtroller and Auditor General to investigate the way that the VHI negotiate prices for various medical procedures with medical consultants and likewise the daily cost of beds; if he benchmarks medical charges paid for procedures in the republic against those paid by health insurers in Northern Ireland, the UK and the Netherlands; and the way it was possible that more than €1 million was paid to one consultant in 2010 from the VHI [18077/11]

James Reilly (Dublin North, Fine Gael)
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The Government is committed to reviewing costs generally across all sectors, including the private health insurance market and scrutinising where savings can be made for the Exchequer and the consumer. I am not satisfied that any consultant should be paid €1 million in a single year. This level of remuneration is grossly out of step with most ordinary people's expectations. The individual, whom I do not know, is working hard in a system that over-rewards that. There are only so many procedures one can carry out safely in a week. If this level of remuneration is available to people who work hard and safely, the service provided is grossly overpriced. I am also dissatisfied that several other consultants also earned enormous sums from the VHI, and to a lesser extent, from other insurers in recent years.

I have overall responsibility for policy on health insurance and, in particular, governance issues relating to the VHI, including such matters as board appointments and the receipt of its annual report and accounts. While owned by the State, VHI is a not-for-profit company operating in a competitive market and negotiates directly with service providers on pricing. While it would be inappropriate for any Minister to intervene directly in matters relating to prices set, I have concerns about the claim levels and, in particular, the cost of services being provided to and paid for by the VHI. It is after all a not-for-profit company which acts on behalf of consumers. The company could and should have done more to control costs.

I met with the chairman and chief executive officer of the VHI very shortly after my appointment in March 2011. At that meeting, I expressed my concerns about the VHI's significant claims costs. Due to its size and position in the market, it has a crucial impact on costs and I made it clear this issue needed to be addressed vigorously. Many of the concerns about the company's approach to costs were outlined in a report commissioned by my Department and conducted by the Department's actuarial advisers, Milliman.

The Comptroller and Auditor General's office has no audit powers regarding the VHI and is not the appropriate regulator.

Additional information not given on the floor of the House.

I also raised the important issue of the base cost of procedures with the company. They responded to me with an outline of how their payments to consultants were calculated. I am not satisfied that these costs represent best value for the consumer. For this reason I met with the Health Insurance Authority on 10 June 2011, as the regulator of the private health insurance market, and requested them to examine the issue of provider costs in the market. The authority will revert to me within one month on how this matter might be addressed.

In April, I welcomed the VHI's announcement of its financial outturn for 2010, which shows a significant improvement over the 2009 outturn. I acknowledged that, over the past two years, the company has taken steps to contain the rising costs of meeting customers' health care needs, including a 15% reduction in consultants fees per procedure, a 6% reduction in private hospital fees per procedure and an annualised reduction in internal administration costs of €14 million. These actions have generated annualised savings of €100 million. VHI pays professional fee benefits to medical practitioners for services rendered on a fixed fee per service basis. In 2011, VHI anticipates that the total remuneration paid to hospital consultants will be over €50 million less than the total remuneration paid in 2009.

However, I intend to ensure that clients and the taxpayers alike get much better value for money into the future and this will be a clear focus of the new board and CEO to be appointed next month.

Tom Fleming (Kerry South, Independent)
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I am disappointed the Comptroller and Auditor General does not have a role in this matter. The remuneration received by the consultant is mind-boggling and many people are incensed when they read about these exorbitant sums. This is also just one case of the charges levelled by consultants.

Consumers are being ripped off and are probably paying the highest premiums in Europe. I ask the Minister to consider what is happening in other EU member states. I welcome the fact that he is dealing directly with this matter. It is about time someone took action.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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The Deputy should pose a question because he is running out of time. The Minister will not be in a position to reply.

Tom Fleming (Kerry South, Independent)
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I request that the Minister develop a step-by-step plan and that he ensure that by the end of the year it should be affordable for people to pay for private insurance. At present, many individuals have been ruled out of the market. The statistics back me up on this and indicate that people cannot afford to pay for private insurance. What is happening is not right. I accept the Minister is trying to establish a single-tier health system and dealing with the matter to which I refer is probably one of the most important aspects of achieving this goal. I request that he pursue this issue with all possible vigour in order that there be a level playing field and that ordinary people will be in a position to afford to pay for private insurance.

James Reilly (Dublin North, Fine Gael)
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I thank Deputy Tom Fleming for raising this important matter. I am deeply concerned about the current position and I am extremely unhappy that it has been accepted, as a matter of course, that the rate of medical inflation is 9%. Why is that the case? We need to examine the position. Has anyone carried out a unit-based cost analysis in respect of what is paid for each procedure? The answer is that this has not been done. However, I have requested that such an analysis be carried out. We are seeking information from abroad in respect of this matter.

I must acknowledge that, in fairness, the VHI has made attempts to save money during the past year. There has been a 15% reduction in consultants' fees per procedure and a 6% reduction in private hospital fees per procedure. In addition, there has been an annualised reduction in internal administration costs of €14 million. These actions have generated annualised savings of €100 million but in my view they do not go far enough. Even though the Comptroller and Auditor General does not have any power in this area, I will, on behalf of the people, endeavour, by means of appointments to the board and through the appointment of a new CEO, to ensure that driving down costs will become the focal point of the VHI's activities. The costs that are charged through insurance are passed on privately to people who do not have insurance. This has implications across the health service and the entire tax base. The Deputy may rest assured that this matter will be aggressively and vigorously pursued.