Sean Barrett (Independent)

I welcome the Minister of State. As always, it is a pleasure to debate matters with her. If I may take up some of the points she made in her speech, while she used the phrase "all political parties and most academics" on page 3 of her speech, we have never agreed with this policy and I will explain the reasons for that presently. The Minister of State said: "I have heard it said that a risk equalisation scheme will be proven to be effective when insurers begin to advertise for older customers." They did. On the 50th anniversary of Ronnie Delany's win - the 55th was this week - they advertised along the lines of "If you can remember Ronnie Delany winning, you should buy some health insurance".

What has happened is that generations of Ministers have accepted the same nonsense from the Department - that is the problem we have. I hope a reforming Government, a reforming Minister and a reforming Seanad will question some of that. The Department in the past never produced a single person who had been denied cover by the other companies. This was the victimless crime. The Department could not show anybody who had been refused cover. The whole edifice is built up to protect the VHI from competition. The stuff about the old is nonsense, and demonstrably so. It is masking a social goal to maintain protectionism.

The recent European court judgment in this regard stated the VHI continues to carry out all its business activities without having received authorisation from the Financial Regulator. The White Paper in 1999 - that far back - stated:

The Government consider that there is a compelling case for change in VHI's corporate status. They consider that maintaining the status quo would only contribute to, or perpetuate, perceived problems in relation to the dual role of the Minister for Health and Children as 'owner' of VHI and regulator of the private health insurance market.

An bord snip nua also recommended that it transfer to the Financial Regulator. That is the dilemma for the Department. It is protecting the VHI from competition, as was rampantly illustrated in the Supreme Court judgment to which Senator Colm Burke and others have referred.

We were supposed to be abolishing monopolies in this area since 1992. It is now 19 years later and we are still asking whether we can keep it going for another year and looking to find some other backdoor method of subsidising VHI on the unproven basis that the other insurers do not insure old people or sick people, even though we could not produce any witnesses.

We were convicted by the European court in regard to the failure of a member state to fulfil its obligations. Ireland must pay the costs in that case and we must also pay the costs of losing in the Supreme Court - I gather the damages will come up on 31 January next, meaning more costs to enrich the legal profession. As Senator Burke said, there was no dispute about community rating, lifetime cover and open enrolment. The dispute, in the Chief Justice's verdict, arose because the Department usurped the powers of the Oireachtas to implement a draconian regime which required the smaller companies to pay more than their profits across to the VHI. It was founded upon an erroneous interpretation of the Act of 2004 and sought to usurp the function of the Oireachtas. The Chief Justice stated:

It is unconvincing to suggest that the Oireachtas would have left such a different meaning to be somehow detected inferentially from the use of the phrase in a subparagraph of a paragraph of a subsection of a section. In short if the Oireachtas intended a different meaning, with all the implications involved, to be given to community rating in that subparagraph it would have said so.

He continued:

For the Court to determine that community rating had the meaning argued for by the respondents [the Health Insurance Authority, the Minister for Health and Children and the Attorney General] and the notice party simply because such an interpretation is thought necessary from a policy point of view for the effective implementation of a risk equalisation scheme would be to usurp the function of the Oireachtas.

That is what the Chief Justice stated. The document also states, "The issue before this Court is not the intention of the State, or State bodies but the intention of the Oireachtas as the legislature." We should be pretty annoyed over what occurred and how it came to be. Why can we not have competition and the benefits that Senator Burke mentioned?

There is increasing evidence that the proposals are even misguided actuarially. Three or four studies I have to hand show that, in the last six months of life, one's health expenditure is considerable. This does not seem to arise in earlier stages. I could quote the figures to the House. The legislation is based on sand in this regard.

The court also notes – this may come up on 31 January – that there are constitutional and competition implications. One gets the results to which Senator Burke referred. I attended some of the hearings. The transcript indicates the officials from the Department of Health said they did not consider the competition implications of the legislation. That makes me feel that, in their words, they were seeking the protection of the VHI. The claim they were looking after old people was always bogus.

What does one get when one protects a monopoly in this way? One gets the abuses referred to in every page of the Milliman report mentioned by the Minister. The report implies utilisation management yields savings regardless of risk profile. It refers to considerable sources of savings and to steps not being taken. It refers to the VHI being unable to provide annual reports identifying the drivers of claim cost increases. It mentions a case, in one of the few tables that is not redacted, in respect of which the VHI would have somebody in hospital for 10.6 days as opposed to 3.7 in what it calls a well-managed system. Protecting this monopoly is increasing the cost of the health service and not benefiting old people, who were never refused cover by the other insurers.

Although half the content of the version of the Milliman report I received has been redacted, or blacked out, virtually every page points to rampant inefficiencies. When one protects a monopoly, the result is a health service with an extremely high cost. Competition was a dynamic but was driven out of the Irish market on legal grounds that were disputed by the Supreme Court and the European Court of Justice. This may cost the Exchequer large amounts of money when the damages are being decided. The position was not soundly based.

I am surprised that there is support for this legislation from the other political parties. I will be tabling amendments later. The legislation does not do what it says on the tin and, therefore, I will be opposing the Minister of State on this issue.