Mary Harney (Dublin Mid West, Progressive Democrats)

If the Senator was in the Dáil last night listening to my so-called privatisation agenda she would smile at that suggestion.

I was in Sweden for St. Patrick's day this year and one of the places I visited was a hospital in Stockholm. Believe it or not, a socialist Government in Sweden brought in a private company to run its biggest hospital, St. Görans, a number of years ago. If I even suggested we did such a thing in Ireland there would be uproar.

I heard a woman interviewed from Roscommon last night criticising the fact that breast surgery was being discontinued and asking what women would do. It was discontinued 18 months ago and nobody seemed to notice but once one makes the grand announcement it is a different story. In health we must open our minds to the best way of doing the business and to innovation in all its forms.

With regard to the itemisation of bills, as I understand it, insurers tend to negotiate a deal with the hospitals. If a person is only in hospital for one day, rather than four, the hospital gains but if a person is in for seven the insurer gains. We want to meet international best practice for hospital stays, certainly for basic procedures. In 17 of the top procedures for which people go into hospital there is, on average, a 50% longer stay than there is in places such as Australia. That is not acceptable and is the reason for there being such debate around acute hospital beds. It is not so much about the number but about how we use the current stock of beds. I would like insurers to be involved in that debate. Hospitals would be paid for what is broadly regarded as international best practice, though I recognise that there are always exceptions and that some people are more ill than others or experience complications, even with a basic procedure.

The VHI was established in 1957 by a Fine Gael Minister, Tom O'Higgins, and I was delighted to meet some of his family at the 50th anniversary dinner. It was established because, at that time, 20% of the population did not have universal coverage and it was recognised that the gap needed to be filled. That is not the case today, however, and I can assure Senator Hannigan that, contrary to what I heard a commentator on the radio say last week, the top group of people will not have to pay for their health care. That is not the plan and everybody will continue to enjoy universal coverage for public hospitals, because that is a good thing and desirable for our society.

Among the reasons people take out private health insurance is choice of doctor, hotel-type facilities etc. There is no doubt the gaps and delays in our services in recent years have forced people to take out private health insurance, believing it leads to more rapid access to services in our public hospital system. That is the case, though it should not be, because clinicians making admission decisions will receive a fee from some people but not others. That is at the heart of what is very wrong with the current contract of employment for new hospital consultants. As we prepare to double the number of consultants we have in the Irish health care system and to produce consultant-delivered services we must make sure we have a contract of employment that meets the needs of the public health care system, rather than a contract entered into at a time when some 10% or 15% of the population had private health insurance.

Private health insurance in Ireland, by comparison with the UK, is very low. Some 11% of people in the UK have private health insurance and there is no community rating or risk equalisation. Essentially, risk equalisation makes insurance affordable to the highest possible number of people. If we did not have it, the vast majority of people with private health insurance in this country would not be able to afford it. I recently met an Irish couple who had returned from living in the UK and told me that their insurance bill for VHI plan D was approximately €2,600 but that the equivalent in the UK was €18,000. That occurs in a market where there is no risk equalisation. Older and sicker people have to pay a lot more and for most it is simply not affordable.

I disagree with Senator O'Malley in that I am a strong supporter of risk equalisation and community rating. They are very important because, without them, companies would cherry-pick their customers and the younger and healthier customer is the more lucrative, being unlikely to need to be in hospital. Many insurance companies pursue young women in childbearing years because, though it is a loss leader, once they have them they have them for life and the chances are they will not cancel their insurance but will also sign up their children. Risk equalisation and community rating are fundamental to our system of health insurance and have served us well.

I do not believe Ministers should decide on the prices of products for a commercial company. I will go back to my office shortly and there will be 30 files on my desk, as well as letters and telephone calls from people unhappy with yesterday's decision, all wanting to tell me what they think of me. I have no expertise in insurance and meddlesome Ministers are the last things commercial companies need. There was a tendency in the past, not with VHI but other commercial companies, whereby political decisions were made which were wrong, and the commercial freedom of companies was interfered with, which is bad for any commercial company.

I commend the Bill to the House and look forward to returning on Committee Stage to propose amendments and deal with more specific queries of Senators.