James Reilly (Dublin North, Fine Gael) | Oireachtas source

Senator Barrett and I are on the same page when it comes to competition and getting the best for our people. I must point out, however, that there is no question of the health market being allowed to operate as a free market because the risk for older people is much greater. Senator Barrett is deluding himself and misleading the House if he believes it could be otherwise. I cannot believe that as an economist he believes that, although he has great experience and may have provided advice to insurance companies in the past. If competition is allowed to operate freely in this area, younger people's premiums will fall and older people's premiums will become unaffordable. Those who are less well or who have a chronic illness will find it nearly impossible to insure themselves. That is reality. That is how the car insurance market works where young drivers who crash frequently end up paying a heavy premium. That is just the way it is. Senator Barrett knows that and I know that. Risk equalisation underpins community rating and the latter is something all sides in the Houses have supported. It remains a core value. Younger, well people subsidise less well, older people. Many of those who are entering their later years subsidised older people when they were younger. It is an underlying principle which remains in place and forms part of the Government's policy. We are not moving away from it.

I did not address the issue of cost as comprehensively as I might have. The HIA continually monitors and reviews health insurance experiences and expertise from other countries and, where appropriate, carries out international research. It is an independent body. In preparing its report on risk equalisation for the Minister in 2010, it engaged consultants to review as part of their analysis the operation of risk equalisation and community-rated health insurance systems in other countries. The HIA maintains regular contacts with corresponding public regulatory bodies in other countries and exchanges research. They have this system in Holland and Germany, to name but two other countries. Risk equalisation must be put in place to level the market. I return to the original question I asked Senator Barrett which was to ask why so few older people are members of the newer companies when those newer companies are eating into the market in a significant way. Why does the VHI have 80% of the payout costs but only 57% of the market? The answer is that VHI members are much older. Older people use services more and present a greater risk. That is a fact which any actuary will confirm. I cannot accept Senator Barrett's contentions.

I have made it very clear that I want the VHI to address its cost base. To be fair, it has over the last couple of years reduced consultant fees by 15%, overall costs by ¤200 million and prices for various procedures by between 13% and 53%. It has introduced a revised payments system for radiologists and pathologists. I want the VHI to do more. As I said in the House previously, I want the VHI to focus on audits, particularly clinical audit. I am astonished it has not had clinical audit before now but it will be introduced and clinicians will be challenged by colleagues on why tests have been carried out in the first instance. I want the VHI to review why it pays what it pays. Some procedures which used to take two hours now take only 20 minutes. That has to be reviewed. We have to change the way we pay. The nonsense of paying per day in hospital must stop and procedure-based payment introduced. While it will not always be possible to adopt that approach, in many cases it can be done. Those hospitals which are efficient and get patients seen quickly with more day-case surgery and inpatient procedures will be rewarded. I want also to stop this nonsense of procedures being performed in hospitals with day-room fees of ¤400 and ¤500 when they can be performed in primary care facilities without any sideroom fees.

I cannot accept the Senator's amendment. I understand that he wants to see competition, which I wish to see also. However, the HIA is independent and the purpose of the risk equalisation legislation is to support the market to support older people with chronic conditions who represent a higher risk to the insurer.