Billy Kelleher (Cork North Central, Fianna Fail)
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71. To ask the Minister for Health the measures he will take to reduce hospital costs for persons with health insurance; and if he will make a statement on the matter. [30750/13]

James Reilly (Dublin North, Fine Gael)
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I have consistently raised the issue of managing costs with health insurers and I am determined to address rising costs in the sector in the interests of consumers. I want insurers to address the base cost of each element of claims which they pay. This is the real issue as costs and the manner in which they have been rising in recent years are unsustainable.

Last year I established the consultative forum on health insurance to generate ideas to address health insurance costs, while always respecting the requirements of competition law. I have made it clear to the health insurers that I believe significant savings can be made, ultimately reducing the impact of rising health costs on health insurance premiums for the consumer. Last week I announced the appointment of an independent chairperson to work with my Department and the insurers under the auspices of the consultative forum on health insurance. The chairperson will oversee a process of review to give effect to real cost reductions in the private health insurance market. Specific areas that I have asked insurers to address include an audit of the volume of procedures; a clinical audit to determine the appropriateness of procedures being claimed for; procedure-based payments, in particular with a view to their extension to the public health sector; and benchmarking to determine the underlying basis for the cost of specific procedures, with a view to driving costs downwards.

I am strongly of the view that all procedures should be provided in an appropriate setting that is safe and provides value for money for consumers. There have been criticisms from insurers of the decision to charge private patients in public beds. The new charge makes sense. We cannot continue with a situation where private patients pay only €75 per night in a public bed where the economic cost is closer to €1,000. Insurers need to address their own cost base urgently, rather than simply blaming others for their inefficiency. The independent chairman of the forum, working with the insurers and my Department, will be charged with identifying real scope for effective cost-management strategies that all insurers can adopt to ensure the long-term sustainability of the private health insurance market. The new chairman of the forum is Mr. Pat McLoughlin.

Additional information not given on the floor of the House

The continued participation of younger customers is important in keeping the health insurance market on a sustainable path. In addition to the work of the forum, my Department established a subgroup of the consultative forum earlier this year to consider regulatory issues relevant to the health insurance market, including proposals to encourage greater participation of younger, healthier people in the market. The appointment of an independent chairman to identify cost reductions and the ongoing work of the consultative forum to promote the participation of younger customers will address the cost of providing hospital care for the population who have private health insurance.

Billy Kelleher (Cork North Central, Fianna Fail)
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The most prohibitive cost is the cost to people who are trying to retain private health insurance. The Minister says that the insurers can do a lot more to drive down costs but equally, the Department of Health could do a lot more to assist in driving down costs. For example, private health insurers negotiate with private hospital providers on payments for procedures, but this is still not possible in the case of public hospitals. Private health insurers cannot negotiate because the Department has set the prices in stone and this makes it very difficult for private health insurers to negotiate costs on the basis of procedures.

I accept that health cost inflation is well above the consumer price index, but the biggest issue causing private health insurers to force up premiums is the policy changes being announced by the Minister. The most recent policy change was that involving payment for private patients in public beds, which will have a catastrophic effect on the private health insurance market. Families will simply be unable to sustain the escalating cost of private health insurance and this will cause further difficulties in the private health sector - and more important, in the public health sector, as more people will depend on it solely.

James Reilly (Dublin North, Fine Gael)
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The bottom line is that it is the insurer, not the Department, that negotiates with private hospitals and consultants. Only insurers can address these ever-rising costs. They have to examine why they pay the level of costs they pay. I acknowledge the argument made by the Deputy. I am happy to engage, through my Department, with the insurers to talk about paying per procedure instead of paying per day in the public hospitals. I want both private and public hospitals to be efficient. I do not want people to be treated as inpatients when they could be treated as outpatients; nor do I want people being admitted to hospital the night before a procedure when they could be admitted on the day of the procedure. I am quite happy to discuss all these matters, through my Department, with the insurers. However, I remind the House that the health insurers are the only ones who can act on costs in the private hospital sector, and these costs are increasing all the time. In the past, the insurers have just passed on price increases to the consumer. Not enough has been done.

As Deputy Kelleher is aware, the Health (Amendment) Bill is before the Seanad this evening. I have to make a choice between being here to reply to his Topical Issue matter and being in the Seanad to deal with that Bill. The bottom line is that provisions to deal with the amounts to be charged for procedures will be introduced on Committee Stage. The insurance forum and the insurers now have an opportunity to propose some real and meaningful changes with regard to their costs and how they plan to address them. This will very much influence what figures will be included in the Bill on Committee Stage.

Billy Kelleher (Cork North Central, Fianna Fail)
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The issue at stake is the private health insurance market per se, which is in crisis. The number of insured people is dropping all the time, with less than 50% of the population covered by private health insurance. This will put further pressure on public hospitals. In the meantime, private health insurers are incapable of negotiating with the public hospital system because the Department of Health sets the terms and costs for the public hospitals. There is a need to ensure competition between insurers and to ensure that public hospital services are used efficiently. Therefore, the Minister will need to allow private health insurers to negotiate with the public hospital system until we achieve this utopian system of universal health insurance. In the meantime, families cannot wait. The figures bear this out because they show the alarming number of families who are dropping out of health insurance altogether or reducing their cover.

James Reilly (Dublin North, Fine Gael)
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I am dealing with a problem that was not addressed by the previous Government. We all know why we find ourselves in the current position, which is as a result of the Fianna Fáil-Anglo Irish Bank axis and the damage it did to this country. We will deal with the present-----

Billy Kelleher (Cork North Central, Fianna Fail)
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That has nothing to do with private health insurance costs.

James Reilly (Dublin North, Fine Gael)
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It has everything to do with the fact that 450,000 people are unemployed and many people cannot afford health insurance because they do not have a job. This is because of Deputy Kelleher's party and its Government's engagement with Anglo Irish Bank; the Government was hoodwinked by it.

Billy Kelleher (Cork North Central, Fianna Fail)
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It gives me more reason to believe this Government is incapable of having an investigation as a coalition.

James Reilly (Dublin North, Fine Gael)
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Either criminal negligence or utter incompetence on the part of the Government was the cause of the problem we have to deal with. That Government was supposed to be in charge of the situation; the banks will be dealt with in due course.

The bottom line is that we have an opportunity now to do something real to address the ever-escalating cost of private insurance - why we pay what we pay for particular procedures, why we pay per day instead of per procedure and why we do not have proper audit or clinical audit. If we address those matters, we can get real value for customers again and minimise increases into the future.

Billy Kelleher (Cork North Central, Fianna Fail)
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Is that criminal negligence on behalf of banks or politicians?