Dáil debates

Wednesday, 11 January 2012

3:00 pm

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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Question 4: To ask the Minister for Health if he has carried out an impact analysis of changes in Budget 2012 to generate extra revenue from private health insurers and their customers; and if he will make a statement on the matter. [1630/12]

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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As part of budget 2012, the Government agreed a number of changes to charges for patients who chose to be treated on a private basis in public hospitals. These changes will have no impact on public patients who comprise the vast majority of those treated in public hospitals.

When individuals elect to be treated privately, they agree to meet the consultants' fees and the hospitals' maintenance costs. These issues were examined in the value for money and policy review of the economic cost and charges associated with private and semi-private treatment services in public hospitals, which was published by the Department of Health and Children in December 2010. It is estimated that the average maintenance cost per bed day in a category 1 hospital is €1,046. In keeping with the long-standing policy of moving towards recovering the full economic cost of providing treatment for private patients in public hospitals, the maintenance charges for private patients in public hospitals have been increased by between 3% and 5%, depending on the category of hospital, with effect from 1 January. It is anticipated that this will yield additional revenue in the region of €18 million in 2012.

While the HSE and voluntary hospitals recoup considerable sums from private health insurance companies in respect of private and semi-private treatment services provided for their members, lengthy delays often occur between the discharge of patients and the receipt of payment from the companies. This has led to an unacceptably high level of debtor days, with a significant amount in fees outstanding. Some hospitals are much more efficient at collecting this income than others. It is intended that more hospitals will achieve the income collection standard of the better performing hospitals and, as a result, a target of €50 million in accelerated income has been set for 2012.

A significant proportion of private patients who are treated in public hospitals are not charged for the services because of the current rules on bed designation. In contrast, the public hospitals' consultants receive private fees, even where the hospitals cannot collect their maintenance charges. This represents a loss of income to the public hospital system and a significant subsidy to private insurance companies. It is intended to introduce new arrangements during 2012 to allow public hospitals to raise charges in respect of all private patients in public hospitals. This new system will be entirely in keeping with the changes required as we move along the road towards universal health insurance. It is estimated that the new system will yield an additional €75 million in 2012.

My meeting the three commercial private health insurers resulted in clear agreement that all would work competitively and co-operatively in driving down private health insurance costs. There was also agreement that savings could be achieved in the services provided by public and private hospitals, a matter to which I have alluded. Significant savings can be made in the costs of the health insurance companies. In addition, I indicated that I would be happy to hear of any proposal from the insurance companies that would result in lower costs. The Department is also happy to enter into new arrangements with the companies. For example, instead of charging per day, a fee per procedure could be agreed, whereby those hospitals which were efficient, carry out procedures and reduce their patients' average length of stay would benefit, while those which were inefficient would suffer.

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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In last weekend's edition of the Sunday Business Post I read an article on some of the Minister's comments last January when he described the increases in insurance premium as an horrendous and appalling attack on ordinary families. The key decisions in the budget from the Department and the Government in the context of redesignating beds and charging the full amount will have a major impact on the cost of insurance for families. The Minister can stand here talking about cost analyses, reassessments and economies of scale but no insurance company can absorb the full cost and they will have to pass it on to the policy holders, ordinary hard-pressed families who are already struggling with the cost of health cover. Almost 60,000 people left in 2011 and the forecast is that another 100,000 could leave in 2012. That will lead to huge pressures for the insurance companies being able to fund procedures and for the public health system, which is already under huge strain and incapable of dealing with the numbers coming through the door as it is. This will have a fundamental impact on people's ability to retain health cover and the ability of the public health system to provide services.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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I remind the Deputy that his party's policy was to charge the full economic cost.

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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Fine Gael is in government and when the Minister was in Opposition his view was completely different. I am only quoting his view.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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The Deputy is not.

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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The paper of record must be mistaken then.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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I am saying that increases in charges will hurt families; there is no question about that. Why was no effort made over the 50 years of monopoly, most of them under Fianna Fáil Governments, particularly over the past 12 years, to address the costs of medical care here? Why is it possible for an individual to make €1 million out of a single company? Too much has clearly been paid for the services and no real cost analysis has been done of the real costs of providing hips, knees or endoscopy. That is what must be addressed. I have asked the companies to look at this not just in terms of an overall cut in costs, but to be more targeted. If a procedure is carried out by a consultant in a hospital that could be done by a consultant or primary care physician in primary care where no side room fee applies, the consultant's fee should be heavily discounted.

That is only one example; there are many areas here where we can reduce costs. The consultative forum is about reducing costs.

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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Going back over the history lesson briefly, the insurance market has been opened up. Does the Minister not agree? There are now other health insurers providing cover. This has led to difficulties in the context of risk equalisation and cherry picking but, fundamentally, the bottom line is that premiums are going through the roof continually and the decisions the Government made in the budget for 2012 will increase premiums for hard-pressed families, whether the Minister likes it or not. It will happen or insurers will not be able to afford to provide cover.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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We do not have to go too far back in history to find that rises in premiums in recent years were the most astonishing rises of all. I want a situation where the costs to the insurers are examined and reduced in a meaningful way and, therefore, the cost of premiums should be reduced as well. I do not suggest that some of the changes we have made will not cause upward pressure, I say that upward pressure can be mitigated by reducing the cost of care.

I hope the Deputy did not suggest in his earlier comments that we subsidise private insurance companies. Surely the public system is entitled to recoup the cost in the same way as the consultant? If someone chooses to see the consultant privately, they will be a private patient in the hospital as well; that is the rule. If he chooses to see the consultant as a public patient, the hospital will treat him as a public patient.