Sean Barrett (Independent) | Oireachtas source

I move amendment No. 4:

In page 3, before section 2, to insert the following new section: The Central Bank of Ireland shall conduct an annual actuarial analysis of the health insurance market in Ireland with respect to the solvency positions of the various market participants operating within the State.

My objective is to ensure the best possible choice of health insurers is made available when the universal health insurance scheme comes into effect. I am concerned that we are starting off on a bad footing, however. Several Ministers and the Department as a whole have approached this area incorrectly, with the result that subscription income has increased by 23% and 200,000 people have been lost from the system. I believe that monopolies are bad but the overriding concern of successive Ministers for Health has been to defend VHI at every available opportunity. It stands in breach of the European Court of Justice and it is ¤4 million down on costs because of a Supreme Court case. Outstanding damages owed to BUPA have not yet been settled and the costs on the European case have also to be paid.

Lawmakers should operate within the law. As recently as last February the Department was supposed to be in negotiations with the Central Bank and Europe on these matters. A White Paper written in 1999 promised to resolve the conflict between the Minister's ownership of a health insurance company and the responsibility to regulate the market. We are still discussing that conflict. Some of these negotiations remind me of the west Clare railway. The problem is that operating in this way is worth approximately ¤45 million per year to VHI. The Oireachtas Library and Research Service has indicated the scheme which the Minister proposes will be worth even more. It currently costs ¤1 million per week if VHI is not properly regulated and it will be the sole beneficiary of a scheme that could be worth two or three times that amount. We have to allow for the possibility that some of the success of the competing firms, until the Department moved against them, was because they were able to sell health insurance more cheaply to young and old people alike.

This is a badly regulated insurance company and that is why I seek to transfer responsibility for regulating it away from the Health Insurance Authority to the Central Bank, which is what we were told to do by the European Court of Justice in September 2012. We issued a statement in February to the effect that we would obey the ruling but another year has passed without action. In the meantime the market is totally distorted, hugely expensive and people are giving up health insurance, thereby frustrating the objective I share with the Minister of increasing the number of people with health insurance. The Department of Health has received the Milliman report, which identified all the inefficiencies that monopolies exhibit. We must move to a different model and stop losing court cases in Europe and the Supreme Court by defending the company. The VHI was the Department's monopoly company for 50 years until it was reluctantly forced by the EU to allow competition. It has never really accepted the need for competition and it continually tries to change the rules to disadvantage the other companies. When CIE was up to the same thing with the Department of Transport, Mr. Justice Bryan McMahon stated in a High Court ruling:

The Department, because of the privileged position of the notice party as an exempt body [CIE], should have been hypersensitive to the competing interest of the private licence operators in applying the guidelines. In dealing with the notice party first, the Department was not only ignoring its own guidelines, but was doing so where the person being favoured was already an exempt body and already had an advantage over the applicant. To ignore the guidelines in such circumstances doubly disadvantaged the applicant.

That is what the Department of Health has been doing and it is also what the Supreme Court and the European Court of Justice told us.

I accept the ruling of the Chair that we cannot discuss amendments Nos. 1, 2 and 3 but we are being asked, as lawmakers, to condone breaches of the law. It is not good enough that despite publishing a White Paper in 1999 which promised to regularise the VHI situation, we are still in discussions with the Central Bank. This will not attract new insurers. In economics the bad guys are the incumbents because they are always seeking regulatory capture, which VHI has managed to do in respect of the Department of Health. New entrants give the market its dynamic but, as the Supreme Court has noted, they face serious discrimination in the health insurance model. By pretending to ignore a ruling of the European Court of Justice, the Minister is damaging the entire sector.

The Supreme Court judgment noted "there was a prima facie interference with the property rights of BUPA as guaranteed by the Constitution which the State was bound to justify" and that where a scheme has "potentially serious implications for legal rights, including constitutional rights, of persons or corporations, one must expect that the intended ambit or application of such provisions will be expressed in the legislation with reasonable clarity."

Ignoring this issue will not make it go away. The previous High Court judgment found, "This scheme involves some elements of anti-competitive behaviour in that the pricing structure of the market is interfered with and entry is less attractive." This is what we are being asked to sweep under the carpet. Everybody who has examined the issue independently has urged the Department to divest itself of owning an insurance company. This was expressed by the McCarthy review of State companies.

This is a financial service and the proper regulator is the Central Bank. VHI should have been transferred a long time ago to the Department of Industry and Commerce or some other such Department. We will have to send the record of this debate to the European Court of Justice to show how lightly its decisions are taken when we draft legislation which is essential to the operation of a proper health insurance market. I regret the bills that we are running up in defending these court cases. Why are we not now availing of the opportunity to make ourselves legally correct in the way we regulate health insurance in Ireland? The Health Insurance Authority condones the current arrangement and says that risk equalisation will be worth much more to VHI. Setting out to deliberately rig the market in health insurance or anything else is something in which the IMF will be interested. We are borrowing money to fight court cases in order to prevent competition in health insurance. I take that seriously.

I propose that regulation be moved to the Central Bank because the Department has no credibility in this matter. The Health Insurance Authority, which is a quango of the Department, also lacks credibility. When we play a match we are entitled to a neutral referee and scorekeeper. The Department never had evidence that the other companies refused to insure old or sick people. It is not possible to tell from an application form whether an applicant is sick.

As the Minister is aware, the records show they were insuring both young and old people for less than what VHI charges. That is what caused the panic in the Department, not that old people were not being insured. The Department has invented a bogus model of the health insurance market to justify what it is doing. The primary justification was the denial of access by old people to health insurance. We have had enough court cases about it. The Minister has not produced evidence of a single person who was denied health insurance at the same price, with community rating, lifetime cover and open enrolment. All of those criteria were adhered to but that was not enough for VHI. It controls the Department and therefore it wants even more draconian laws against competitors, even when those laws result in a 23% rise in claims and 200,000 people leaving the system. We know what the Department was at; it is plain as the nose on anybody's face. It was protecting the VHI but what about the alleged issue that there is a problem with old people? I want that independently evaluated and not by any agents of VHI or the Health Insurance Authority.

I have a paper by Robert Fogel of the University of Chicago in which he states that increases in life expectancy during the 21st century will be fairly large but the effect on health care will be modest. Another example we can put before the Central Bank or any neutral person is from the health education research committee of the University of Oxford which states that age is in part a red herring in relation to health expenditure; proximity to death is more important. To paraphrase a James Bond spoof, you only die once.

We know that the Department was defending VHI, and that is what it has always done, but I need independent evidence that, first, somebody ever refused to insure old people in Ireland and, second, that the old are the problem. That is what the Department continues to tell us is the problem but in that regard I have quoted evidence from Oxford and Chicago universities.

Regarding amendment No. 4, as a first step I want the Minister to give some indication that fairness will intrude into this field by transferring that actuarial function to the Central Bank, which is the Financial Regulator for all the financial sector. This health insurance company should always have been regulated by the Central Bank. That is the European Court decision and that is what the Minister was discussing with them last February. He has had enough time to reach a decision given its promise since 1999. At least let them prepare the studies so that people might have some confidence that when they get estimates of what individuals should pay for health insurance, it is soundly actuarially based rather than protectionism raising an ugly head in the Department of Health and in the Health Insurance Authority.